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I've been reading up some hacks on Kinect development to work around the fact that there is no official SDK from Microsoft. Even if we do manage to create a game, can we distribute it through the XBox marketplace? Or will it cause any issues?

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No. Without official support they won't let you release it. The problem would be if they changed the way something worked (behind the scenes in their libraries) and you weren't going through official channels to access the Kinect, then it could break your Kinect support and it would make both of you look bad. Full blown (paid up development kit) game developers aren't allowed to access hardware by hacking around the official libraries for the same reasons. Hardware changes over time for cost-reduction and other reasons.

Have you managed to find hacks to get it working with XNA for the 360? I thought most of them were PC specific and non-portable. I can't imagine it'll be that long before they release an official SDK, they've already said the PC is getting one very soon, hopefully XNA support will follow closely.

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There are a number of hacks published, but frankly I have not checked each one and seen the limitations of each one. Wanted to get the clarity on the marketplace regulations before spending time on those. –  Roopesh Shenoy Mar 10 '11 at 12:57
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Microsoft have plans to release the Kinect SDK for Windows for free this Spring (link). The point to notice here though is 'Windows'. That wording suggests to me that there'll be some additional fee to realease games onto the Indie Channel on the XBLA; though they might just absorb the charge into the current one for distributing a game to the service.

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