My xbox 360 only pays old games(like pgr3) and not new games(like need for speed shift)

That message would appear to be telling you that you need to update your xbox, which, as it has been modded, may not be wise. I would recommend asking whoever modded the xbox whether it is safe to update, and what the process to update is with whatever modification method they used.

Your going to need to log into x box live and update your account.Including your new x box.

You can either contact Microsoft Xbox Suppot to ask for the installation disc or if you have a Forza 2 or PGR3 game disc you can use them as well. These game discs has a patch that will update the wireless racing wheel and should make it work.

What kind of cables are you using? What are the colors of the cables?
Have you tried your friends AV cables?
How many more discs experiences this?

- Try your friend's xbox360 console's settings to your console.

Laser is weak , needs new laser
or one of the two motors in
the drive is dead, needs new drive
If you need to replace the drive
you will have to remove the old drives P.C.B
a instal in the new drive.

Some game are compatible with the new xbox 360. They are called backwards compatible and you do need to flash upgrade the OS on the new xbox 360 system.

You need to go to the xbox website and go to support and download the flash update then burn it to disk and put it on the xbox to update the software. Again not all old games are compatible with the new xbox system. If your buying used games like I do make sure it says bc next to the title before buying them.
Here is the link to the upgrade

http://www.xbox.com/en-US/games/backwardscompatibility.htm

you have to download them them from live or go to xbox.com and get a list of old games that work on 360

You may have to have a broadband internet connection to download the update or the game itself is not compatible. Microsoft did not make it so all Xbox games are compatible with the Xbox 360. Try looking up the games and see if they are playable on the 360.

in order for you to get content on your xbox you have to get xbox live its free for the silver member ship which gives you acsses to the marketplace but the gold gives you everything so if you have internet connection get the silver member free then you can get content.

You can try a 3rd game and see if it loads and if so then there is a problem with PGR3 and not with game. Also clean with alcohol and try again