Yeap under warranty. My Falcon Elite got the same message a few weeks ago.
The good news? You'll be covered from 3 years of the date you bought it for both that and RROD. So hopefully in the next year or two MS has another price drop cause I don't wanna spend more then $125 on another XBox :P
We have two 360's in my house (one elite and one newly acrquired jasper arcade with the built in memory) because I got that error and my wife wanted to play her games badly.
Turn around time was under two weeks. They e-mail you a prepaid UPS label and I had my old coffin (aka box) from my first RROD a year ago so I just packed it up and sent it in. They got the system four days after I brought it to the UPS store (stupid holidays. gah.) and it was sent back two days after that. So yeah, under two weeks before you get your xbox back.
In the mean time I went to play with my PSP and *gasp* the Wii while waiting for it to return.
My only real issue is the stupid DRM issue with XBLA titles. Half my games didn't need to be re-downloaded to play offline, the others didn't. Not a big issue since I'm always online but if your not it can be.
It's just that simple.
