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This problem can not be fixed yourself. The lens has either become scratched or dirty, and can not read discs. Send the console in to Microsoft support and they can fix it under the terms of your warranty.
The way to fix this is to open the disk tray and blow inside for about thirty seconds getting the dust out of the way of the laser also blow across the disc tray and the surface of the disk. Then keep closing and opening the tray and it will start to read hopefully. if this does not work go out and buy a disc cleaner. it looks like a disc with sponges on it and when you insert it into the console it cleans the inside for you.
i am going through it right now
my personal experience
Does it also say Unable to read disk? If so you may actually have a bad disk drive. It is one of the common issues with the xbox 360. Not quite as prevalent as the 3 rings of death, but still an issue.
How old is the unit? Do you keep it at floor level alot? Because this thing ( like all the game consoles) is a dust MAGNET. Get a can of compressed CO2 ( Dust off) Open the drawer and shoot into the draw over and under. Reboot . Cant guarantee anything though
Whenever mine wouldn't read disks i'd hit it a few times on the top
face (lower left side above dvd drive), then turn it back on to see if
it would read it. Sometimes i had to do it 5-10 times... and eventually
it worked again for a few months..... (of course, do this at your own risk, but it works for me)
if that doesn't work I'd
Call xbox 360 support and see if they will fix it for free (they are
fixing the 'flashing red lights" error for free right now... possibly
your disc read error). if they refuse to fix it for free and you don't
feel like paying...... then you may need to make it have the three red-lights
Getting to the dashboard screen is a good thing but still cannot rule out a bad circuit board or power supply.
All the symptoms point to a bad DVD drive but the opening/closing by itself do indicate a problem with the microprocessor.
Can you turn the power on and off with the small button?? If not, would definitely suspect bad board.