The three red light come on usually because the system has overheated and some of the components have come loose.
There is the old "wrap it in a towel' solution, but that is a temporary fix and will not work forever. You are more than welcomed to try it, but I will not direct you any futher on this solution.
You will either need to send it back again, or buy a new one. The new ones come with improved hardware that have not had nearly as many failures as the original 360s. All new x-box 360s come with this new hardware.
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