The only hope an XBox 360 folding client would have for being competitive with the PS3 is if it could somehow exploit the GPU. The CPU alone is not going to come close to the Sony-ninja-written code running on Cell that the PS3 client uses.
The GPU client on the PC side shows good result, but it still takes quite the optimism to expect the XBox 360 GPU to achieve the same. We know it's an older design that was finalized some time before the R5xx PC line. It might not have the architectural perks that enable the later ATI GPUs to do folding in the first place, as opposed to the ATI X800 line (which is the half-step before C1) or the NVIDIA GPUs released around the time. It might be able to fold, and it might as well not. What we do know with relative certainty is that it's a small, area-optimized chip with a relatively modest transistor count when compared to
its contemporaries.