Sounds like a DVD drive failure, which is not uncommon in the first or even second generation xbox 360's
if it's out of warranty take apart the xbox and replace the drive. if it's not call Microsoft and get it repaired
# Turn console off and then on. # Clean the disc and examine it for flaws or scratches. # If this behavior occurs with one or two discs, search the Microsoft Knowledge Base for the specific game title(s). If you find a known problem, follow the information outlined in the article. # Delete the appropriate saved games. See Note 1. Copy a saved game to a Memory Unit (MU) if you have one available. # Try three other games, and then try the original game again. # Try the game on another console if possible. # Replace the disc at retailer. # Repair the console Note 1 If a saved game file is corrupted, it can produce a disk error message in that game, particularly when the game starts. You can resolve this issue by deleting all saved game files for the affected game from the Xbox hard disk. This method is effective approximately twenty-five percent of the time. If you experience this disk error message with more than two games, this procedure will likely not resolve the issue. Another trick to try is to turn your console so its vertical( sometimes works)
SOURCE: xbox 360 unreadable disc
If you have a close-by friend check the game on his xbox to see if you get the same error. If you do not, then it is most likely your xbox. You may need to return it to Microsoft.
Try to insert the disc, power off the xbox, unplug it completely. Wait 30 seconds then plug everything in and power it back on and see if you get the same error message.
If none of these suggestions are an option, you may want to purchase a $10-$25 CD that has bristles that cleans the lens that reads the CD's inside the unit. (I know Maxell makes them) Then try the game again.
SOURCE: xbox 360 unreadable disc
THE SAME THING HAPPENED TO MINE I SENT IT TO MICROSOFT AND THEY FIXED THE PROBLEM. IT USUALLY IS THE DISC LASER THE READS THE DISC.
SOURCE: My xbox 360 keeps saying disc is unreadable!
bad disc drive most likely, unless you tempered with it...could also be a bad connection
SOURCE: xbox says disc is unreadable
Your xbox may be overheating. To fix the problem, what you will need to do is stop the heat getting to the GPU and the CPU and to do this you can use a good Xbox 360 Repair guide or of course you can send it in.
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