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SnowWhitesDrug said:
aww thats a shame, My dashboard looks a tad pixely near the controler buttons down the bottom and the text isnt crisp like it is on a computer or ps3. But in games the text is very nice. but when you sit far enough back you dont notice it. I will just deal with it, im happy to know theres nothing wrong with the console though! :) thanks for all your help every one! XD

It's not you, it's not your console, and it's not your set.

As it's been mentioned, dashboard is rendered at 1280x720. Upscaling it to 1080p via the 360's default video settings will result in a softer image (it shouldn't look pixelated).

So there's nothing wrong with your set up. Just sit back further, or if it's really bothering you, set the console output for 1280x720 for a sharper, albeit more pixelated image. It will never look as pixel for pixel sharp as the XMB interface which is rendered at 1920x1080.