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I am assuming you are referring to playing original Xbox games on your new 360. Halo was the only game from the box that you can play directly without needing to download the patch to play but supposed newer systems have the capability to play more directly out of the box.
Other backwards compatable games can be played but you will need a samll patch for each game. The game if playable will automatically attepmt to download the patch from xbox live. So you will need to have your Xbox 360 conected to live or have a patch disk. (which is available via the Xbox Magazine disk or can be downloaded online and burned to a disk)
In order to play online via XBOX Live, you'll need to purchase a time card (1month, 3months, 12months, etc) to play online. So yes you'll need an xbox live card if your looking to play any games online.
Form your Xbox 360 you need to be connected to the Internet by a straight LAN line or wirelessly. You can test you connection by going to the setting screen on your Xbox 360.
Once connected to the Internet for your Xbox 360 go to your main account screen and find the tab that says "Join Xbox LIVE" click on that link then follow the simple instructions that the Xbox LIVE will provide. At this point you should have a name in mind for your gamer tag.
Xbox 360 LIVE has several different options available for memberships. They are a monthly, 3-month and 12-month membership accounts. I would recommend a simple one month account if you just wanted to check out the features offered on XBOX 360 LIVE. If your an avid gamer and love to play games online with friends, the 12-month Gold membership is the way to go.
Once you've completed the process of joining Xbox 360 LIVE, they will send you a confirmation email confirming your membership. Now you can log on to Xbox 360 LIVE and start doing this like customizing your avatar and playing online multi-player games.
Some game are compatible with the new xbox 360. They are called backwards compatible and you do need to flash upgrade the OS on the new xbox 360 system.
You need to go to the xbox website and go to support and download the flash update then burn it to disk and put it on the xbox to update the software. Again not all old games are compatible with the new xbox system. If your buying used games like I do make sure it says bc next to the title before buying them.
Here is the link to the upgrade
if you have made an xbox live account and have valid time start the game. When you get to the menu press start then go down to xbox live click on it then it will ask you if you would like to connect press yes then find a race you want to do and begin
Try opening the disk tray with the 360 off.
Push a paper clip into 1 of these holes in your 360. It will pop the tray out. Grab the tray pull it out all the way. Put a game in, leave it open! Then turn your 360 on see if it boots the game.
"Your Disk tray might be going bad. It might be fixable but I will have to try it out on a bad drive which iI dont have at this time."