Is that legally enforceable? If a mod doesn't contain code / assets from the game itself, what legal rights does Microsoft have over the distribution of that mod?
Yes courts have found that game mods, even if they don't directly include any content from the original game in their distributable, count as derivative works under copyright.
> The ruling continues to apply to the legal status of video game modding, with mods viewed as derivative works that require the consent of the copyright holder. While this may legally limit the creation of mods, machinima, broadcasts, or even cheats, many game developers have authorized and encouraged some of these activities.
> The ruling continues to apply to the legal status of video game modding, with mods viewed as derivative works that require the consent of the copyright holder. While this may legally limit the creation of mods, machinima, broadcasts, or even cheats, many game developers have authorized and encouraged some of these activities.
https://en.wikipedia.org/wiki/Micro_Star_v%2E_FormGen_Inc%2E