First let's make sure we are on the same page. Are you talking about when MS locked people out of their hard drives?

And you are asking for proof on how MS knew they were hacking? Well, I don't know the fact that they were all playing CoD: Modern Warfare 2, two weeks before release had something to do with it...

And are you really comparing the removal of something that was originally on consoles to the removal of an unauthorized third party memory card?

They didn't lock them out of their hard drives.  They banned their consoles (and anyone who purchaed those consoles used) from Live, a service they were paying for.  And some may have been playing illegal games, but I doubt all 1 mil of them were.  A lot just used it to run Linux and/or use a larger, cheaper HDD than what MS supply.  Though, we really have no proof of what all of them were doing and MS has not revealed any proof that they may or may not have had.  Either way, this means that MS took a feature away that they payed for, to stop a few that would pirate games (though really it doesn't stop them from pirating games, just playing online).  How is that any different than Sony taking away a feature to stop those who would pirate games?  It's not.  The only difference is Sony did it before the PS3 was actually hacked.  Should they have just waited till it was hacked, so it would be ok in your eyes?  Of course not.  They are protecting their interests, just like MS did.

And no the third party memory card isn't on the exact same level as taking away PS3 Linux, but it is similar.  It's still taking away the ability to use whatever memory card you wish on YOUR system.  Again it hurt the ones who just use them for legit reasons, to stop piracy.  Like Sony did with Linux.

http://majornelson.com/archive/2009/11/04/xbox-360-console-bans.aspx 

Now get me a link where it says they banned innocent Linux users

Again, you give an official announcement, not any proof supplied by MS showing they had exact knowledge as to the intent of these people's mods. 

Here's a couple of interesting links:

http://kokugamer.com/2009/11/12/xbox-mods-unequipped-for-ban-backlash/

http://blogs.zdnet.com/hardware/?p=1042

http://xbox360hacks.com/xbox-live-banned-fan-mod/

Clearly, MS can't 100% tell if it is hacked or not, as some people were getting banned without having a modded console and some with modded systems aren't banned.  Some even claiming to be banned for simply having custom cooling for their system.  So again, MS was taking away a feature, one gamers actually had to pay extra for, to try and stop a minority of pirates.  THE EXACT SAME THING SONY DID!  Yet, you only bash Sony, while defending MS. 

Then you're in breach of their T&C's by modifying your console.  This isn't the exact same thing at all so stop talking garbage. 

For the record anyone that was banned in the last wave could appeal their ban if they felt they were innocent and Microsoft would check you console manually and make sure the right call was made, funny how there wasn't a flood of reports of people proving they were wrongly banned.  The simple fact is some cheap ass pirates got butt hurt by finally being banned for gaming on Live and cried a awful lot.

Finally the number of people banned was not 1 million, the Xbox Live manager came out in an interview and said that number was complete rubbish, I really wish people would stop using some bullshit rumoured number as a fact.  Link below:

http://www.1up.com/do/newsStory?cId=3177039

I'm not talking garbage.  Anyone who bashes Sony for doing this, but then says its acceptable for MS to do things to stop pirates is talking garbage.  Biased garbage.  I really don't have a problem with MS going after pirates by banning people from Live (though like I said, it doesn't really stop them as much as punish them).  And it's good that in the last wave people could appeal the ban, though it does suck for anyone who may have been banned wrongfully in the previous waves.  My problem comes from people saying Sony is in the wrong for trying to stop piracy by removing a feature, while MS is in the clear for trying to stop/punish piracy by basically removing a feature (one they actually had to pay extra for).

As far as the number goes, the estimates from other sources, besides MS, is between 600K and 1 mil.  We know for a fact that the 360 version of MW2 was downloaded from torrent sites about 1 mil times (970K was the number reported).  http://torrentfreak.com/the-most-pirated-games-of-2009-091227/  Also, considering that there have been multiple waves of bannings, I bet that that number does fall into the 600K and 1 mil estimate.  If MS really wanted to prove this false, they would release their numbers.  But, until they do, I'll believe the other sources.

No Sony messed up. They over reacted and know have given an excuse to the hacker community to crack there system to run Linux on there machine. You can try and blow that off but hackers try to run linux on everything(they just loaded linux on the N900). Fromt here you get the Homebrew community because of the ability of running unsigned code.

This guys exploit that they are patching was very complicated and risky it involved opening up the console and it didn't even run games. perhaps it could of been simpler but now because of Sony's reaction I can guarantee you will be able to run ISOs on your PS3 slim in 6 months.

Oh well.