Nobody has ever been told what specifically causes the issue? I actually live near a service center but I want more information. If this is a widespread issue there should be a recall.

A refund is not going to happen as this thing was purchased in July '09. Musician's Friend only accepts returns made within the first 45 days from shipment.

I am going to need some L6 involvement for this to happen.

After about 9 months of having a broken POD X3 Live I finally took it apart and I found that my issue was being caused by a really bad hack job that someone implemented at Line 6 I would assume. There are even parts where traces were bypassed. As soon as I took the top off and finger nail cleaned up one of the areas that look suspicious it worked and showed up in Windows 7. I took Quality Assurance for Electronics in High School so I know what I am looking at.

Its the same copper paint that I mentioned was an issue when the X3 Live first came out. There is also some copper showing and what looks like a damaged trace. I'll post some better pics in the daytime.

The top right box shows a capacitor was added and some spots were hot glued and you can see the flecks of copper.

The bottom left box has a patched trace for sure.

I was able to flash the firmware to 2.0. I am going to recoat those traces with nail polish and put some sealer on the bottoms of the painted plastic as well. I can only imagine what I would have been charged to fix this out of warranty.

Updated: I looked some more and there is a piece of electrical tape hot glued above D40 and D43 and the tape was covered in the copper. There trace in the bottom left was scratched but its fixable.