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Try taking the face plate off and then hit the button with a small object. If it opens it's you faceplates's fault and you should try and get a new one. If it doesn't it's CD Drive's fault. You could take a butter knife to it and pop it open but I would suggest calling Xbox Customer Support first. Their number is 1-800-4MY-XBOX. They can help you out from there. You might have to send it in, sadly.
have you tried to open the drive using the xbox dashboard, when you press the eject button does the power light flash? is there any noises coming from the drive when you try to eject.
It could be a faulty drive and the only way to get into the drive is by opening the console up and this could void your warranty. if your hearing noises (motor spinning) from the drive it could be the drive belt has snapped (like a small elastic band) you could have dirt in the gears and cogs jamming the drive. so you wouldnt hear noises (except the disc spinning if there is a disc in it).
if the power light flashes when you press eject more than likely it is the drive belt or dirt in gears.
I just found a post on this and it worked for me. My warranty is past. So I took matters in my own hands. I took it apart which was fairly simple cleaned the lens and surrounding areas but it didn't work. But this is what I found out its not reading the disk because the disk isn't spinning. With the box apart and drive open I put it back in the system and turned on the power I noticed the drive would spin slowly I then while the disk was trying to load I spun the disk by hand to help it along and wala it started spinning I powered down put it back together and as of 10:45 2night my gaming nightmare is over. I hope this was helpful. Good luck all!!
there is a manual eject on the front of the 360 under the face plate, if you take the face plate off their are 3 different slots that the relase can be in, you would need a thin long thing like a needle, and does take a little push, took me a lil while, you can see where the holes are on this web site, obv doesnt fix the problem, but at least you can play games until you find a repair.
I had the same problem, thats a faulty drive, I could be that the heatsink under it is so hot that is making the drive faulty, So you'll have to open your xbox a put something between the heatsink and the drive. But if that doesn't work then you'll have to replace it with another drive and transfer the old firmware to the new drive so it can work on your xbox.