As per Timmy's reference to his failed XBox 360, I figured I'd post this.
My 360 failed with the RROD (Red Ring of Death- 3 Quadrants, general hardware failure) after 2 years. I sent my 360 back to MS twice before because of a Disc Read Error similar to what was rampant in PS2's. I didn't have to send it in for this occasional problem, but I figured it was covered and they even laid out for the S&H, so why not? In all of my experiences, I've had my 360 back in less than two weeks, and they call and Email to keep me updated on the progress. Overall, dealing with repairs and service through MS I have to say is pleasant, and far exceeded my expectations.
Anyway, I got the RROD about a month ago on my 2 year old 360. I called them up to arrange the repair and so they'd ship me the 'coffin' which fits the 360 perfectly to send it back via UPS.
Anyway, while I waited for the coffin (3 days) I heard of the 'Towel Trick' which will fix the RROD at least for awhile. I wrapped my 360 in a couple of towels (or blankets will do) and turned it on. I left it like that (horizontally) for 30 minutes and it got VERY hot. Then I unpacked it from the towel and let it cool down again. It worked for 5 minutes, then the game froze up, and when I re-started it the RROD was back. I repeated the procedure and left it like that for longer. I turned it on and after gaming for over an hour, "SHAZAM!' It was working again! The theory is/was that the heat melted and re-solidified the solder points that hairline cracked and failed which was the cause of the RROD failure in the first place.
I was able to finish the game I was playing when my 360 failed (MoH-Airborne). I even had enough time to try out another game I had to play to decide if I liked it or not and will return it to Gamestop (Mirror's Edge) before I would return it.
The point is, after the Towel Trick I even thought about NOT sending my 360 in after it was working fine again. But, since it was covered and free to fix, I figured I'd send it in anyway. The only complaint I have is the new 'XBox Experience' replaced the old menu format that I liked much better. Other than that, the repair service of MS is great and very fast.
If your 360 is out of warranty, the Towel Trick will make it work. It may take multiple attempts but it does seem to fix that particular failure. Call MS, 1-800-4-MY-XBOX to see if your 360 is covered and arrange a repair. All 360's purchased within the last 3 years are covered for RROD failures or the E74 failure (I don't know about this failure and have no experience with it).