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My Xbox 360 does that too sometimes. All I usually do is first try turning the disc. If that doesn't work, try an empty tray. If you still get that message after trying again, put in a DVD. That can help. If none of that works, unplug your 360 and leave it for a day. Then try again. Please rate my answer if it helps.
it sounds like your dvd drive is dead if its still under warranty you should just send it back to microsoft the only other thing you could do is buy a replacement dvd drive and put it in yourself but only do that if microsoft wont take it or you'll void your warranty
i have the same problem i called xbox and they said that it needs a new disk drive and it would be 100.00 so if you want it fixed youll nedd to call 18004myxbox and they will give you all the info on were to send it or for 100.00 more you can buy a new one like i did
either you will need it repaired or u can do it the cheap way and after the disc tray is shut put some tape over it and see if it will read it still. If not it will need to be repaired. It will only cost about $35 or free if you are still under warranty.
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."