The X value is used as a visual indication of security "events". This value is from a field stored in secdata.bin, offset 0x28 for a length of 8 bytes. It is visually displayed from dashboard in one of the system info screens. The X value is encrypted though and this tool will decrypt and display known recorded security events.
The console does not need to be connected to Live to do this procedure. At the same time this does not guarantee that the console with a "clean" X value has not been flagged on the server side.
This can be used as a tool to check the status of a second-hand console and be valuable information in considerations before purchasing.
Many thanks to the people who helped me.