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You have what they call a hot spot which is caused when the laser is too close to the disk and burns them. It will not always damage the media but in 98% of cases it will. I suggest that you have the laser checked by a qualified technician and have replaced if necessary. It may just need to be readjusted to the correct settings. These can move with heat stress, Vibrations and many other factors.
What is the date of manufacture of your XBOX 360 console?
It's a problem with the motherboard. You will find a lot of places claiming to repair this type of problem for peanuts -- but the best thing to do is to go to Microsoft for this repair. Most repair claims are temporary and can cause more damage to your XBox 360. Microsoft warranties the original system against the 3 rings for 3 YEARS now.
if you run a search in google you should be able to find guides on how to stop this happening, i did have them but have since formatted. you basically put three bits of foam in seperate places and it stops the 360 drive from damaging game disks. this was common in the very first sets of designs and samsung drives in particualr.
Xbox DVD-Drive's often scratch circles into your discs and some even got malfunctioning lasers that will burn rings into games. To
prevent the circular scratched from happening avoid moving your console
at any time while it is running however it often also occurs just in
regular use especially for older consoles with Hitachi or Samsung
drives. As far as I know Microsoft replaces discs that were clearly
damaged by a console free of charge, at least here in Europe they do. Try
calling Xbox Customer Support and ask for a replacement it is worth a
try for sure even if they shouldnt replace it they will at least give
you a 1-month subscription for Xbox LIVE in exchange.
If you can get the console replaced as well depends on the support person you are talking to but usually they charge you for that if you want to fix the drive yourself, open up a PC drive and take the foam pads outs and install them in the 360 drive this will prevent the discs from getting scratched they just didnt use these pads in the Xbox for some reason which led to these problems...
there is a common occurrence of total failure in Xbox 360 the 'red ring of death', where three of the red lights on the console flash, and the console locks up. there is a recall and repair for the failure that extends to 3 years from purchase, many xbox 360 have been repaired more than once under this plan, my son's has. http://support.microsoft.com/kb/907534?sd=xbox
MS will not repair the xbox if it has been opened they will suggest that the failure is caused by any modification, take photographs of the console before placing it in the shipper MS will send you for the repair, they will damage it, you will need proof
do not attempt repair yourself, http://service.xbox.com/servicehome.aspx
I am almost 100% certain that the warranties of xbox 360 consoles have been extended 3 years.
I also had this problem some months ago, and Im sorry to say that I was told the problem is in the hardware. I had to send my xbox in, and they sent me a brand new one, fully covered under warranty.
Give xbox a call... 1-800-4MY-XBOX, ask about the warranty of your system, and also let them know your problem. The only way I ever got any games to work with this problem, was to open and close the tray over and over until it finally worked, so I finally just sent it in. Good luck.
Your system is fine, the disk is a different story. By moving your Xbox 360 the drive does some funky things. The disk probably has some deep grooves around the egde. In future, dont move the 360 or backup your xbox 360 games with http://www.everything4360.com