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My 360 is/was having a similar problem...my 360 would say "reading disc" then "open tray". Well since my system is only about 8 months old...I opted to send it in for repair. Its under warranty. My system is in route to be fixed as we speak. I would advise you to get yours registered too.
I took a small coffee straw and put some liquid silicone in it and stuck it through the front disc tray carefully to the small engine in the back. Hold your finger over the back of the straw so that the liquid stays in until you are over the engine top.Then I put in a disc cleaning disc for about 10 sec and then put in saints row 2 and it hasn't said "open tray" for about two weeks and counting.....
Try using a CD cleaner. Generally this sort of problem occurs due to dust accumulating on the lens. The CD cleaner comes along with a solution.just spray on the CD and allow it to play in the CD drive. Sometimes the problem might even be due to a virus. Check whether your anti-virus is up to date.
A lot of people have this problem. Before you post, look around.
Anyway, I was able to call xbox 360 customer support. We did the troubleshooting but it still would not work, so they took my xbox 360 in for repairs. I would not try to fix it on your own because it might negate the warranty.
I just solved this problem, very simple actually. Possibly can happen when the drive WILL close, but then loud noise as it tries to spin the disc up. Open the drive up (4 little screws on the bottom) and lift the lid up. If you look on the top white magnet spinner, the bottom side of the magnet system broke off of the disc motor. It will look like a little metal ring stuck to the white spinner thing whatever it's called. I popped that off and examined it, then used some krazy glue to stick it back on the motor spindle and it's away and going now. The reason the drive will not close, is because when the little magnet first breaks off it can get misaligned then when it tries to shut it gets in the way. The MAY be the cause to the problem. I fixed this issue today with mine, hitachi drive.
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.