It's the E74 error. It doesn't freeze or crash your machine like RROD, not at first anyway. It just give weird artifact one the screen. Eventually it will flash one red light or give you E74 when you try to restart the 360.
It seems to be more common with 360 from late 2007.
There's a thread on NeoGaf that track dead 360 and several of them have this same problem. Though in general since the release of Falcon the 360 failure report is down significantly. And I am surprise at how courteous and fast MS service is. They don't ask me silly stupid questions and quickly got the repair service set up. My console is already back.
While I would rather not have to deal with hardware issue but I have to give a prop to MS for making it fast and painless.
