Here's what you do if you get the Red Ring:
1) Send in your unit for replacement
2) Get the unit back from MicroSoft
3) Immediately go to your nearest GameStop and sell them the old unit, say nothing of the RROD, take the credit and put it towards the purchase of an XBox 360 Arcade set. You keep the old hard drive.
Why?
I wish I had all the links up and ready to go, but when I RROD'ed I did a metric load of research into the motherboards they use. They've all been identified by the hardware enthusiasts via the "code names" MS uses for their development projects.
The original motherboard is called the "Xenon." It had a 90nm CPU and a 90 nm GPU affixed on either side, directly opposite one another, of the circuit board and positioned RIGHT OVER THE HEAT SINK. They then used shoddy sodder...so heat sink gets hot, sodder melts, chip(s) comes loose, RROD.
This is why, for SOME people, the "wrap your 360 in a towel" method would work for a while. It would get so hot inside that the sodder would re-melt again, you would turn the 360 off and the chip would set itself right on the board again and work for a while longer before finally RROD'ing again.
Then there was a motherboard called the "Zephyr." This was the first one with HDMI capability, that came out with the Elite models. Still 90nm chips, still heat problems, just added some more heat-dissipation hardware. Didn't do the trick - Elite RROD rates were as high as preceeding models.
The second-
gen motherboard, what anyone who waited a year or so to get their 360 probably got like I did, was the "Falcon" chipset. Used a 65 nm CPU but the same 90nm CPU as the Xenon and Zephyr which ran hot, had some different heat pump configs.
If you send in any of these three earlier XBox versions after an RROD what MS sends you back is called an "Opus," which is a "Falcon" generation motherboard designed to fit in a "Xenon" case. The Opus is often referred to as the "zombie-killer" because they use all the cases from the dead Xenons lying around from RROD returns. There's no HDMI capability on the Opus as the Xenon cases don't have a port for it. The
only way you get an "Opus" is as the result of a RROD return.
There are also reports of MS adding new copper heat sinks or even fans to Opus units, which they then send out to you to replace your RROD'ed unit with. Check the serial numbers of what you send out and what comes back. Most people report getting an entirely different unit back rather than a repair, which means "Opus." I did.
So while MS touts their program as sending you a "repaired" XBox 360 per the warranty, it's not your 360 but a cobbled-together Frankenstein of a unit that uses what should be an HDMI-capable motherboard but which jips you of that due to the case it's in.
You are better off trading in your old 360 to get a new Arcade version which is going to have the updated motherboard/chipset, AND which will give you HDMI capability if you bought your XBox before they had the HDMI ports. There is a rumored "Jasper" motherboard out there which is supposed to be an improvement again on the Falcon motherboards.
The "Jasper" motherboard is rumored to have 65 nm CPU and a 65 nm GPU, will draw less voltage, and won't have any spots on the motherboard that will get as hot as in previous motherboards. Supposedly, you can tell if you're buying a "Jasper" motherboard in one of two ways:
1) The power bricks draw 150w instead of 175w. That doesn't help you in the store.
2) Look at the Lot number on the outside of the box. Jaspers are said to begin at lot number 0843, so the higher than that you go, the greater the chance that you have a Jasper and not a Falcon.
I honestly can't remember what I got when I did this switch, but I was happy just to have a newer version of the motherboard rather than a Frankenstein job, and I've just accepted RROD as the potential price to pay for having an XBox 360. I don't like it, but the PS3 has never seemed a viable option for me. None of my friends have them, and I prefer the game catalog on the 360.
You also can get HDMI on your Arcade 360 without buying the amazing rip-off HDMI cable set MS sells through a simple hack, but that's another story.