I'm unsure about XBOX 360 compatibility but I just bought this wheel:
There is simply far too much torque for this one to sit on your lap though.. You will need some kind of set up, for example you can buy stands for them or you can build your own (shows a XBOX 360 wheel):
If you are willing to get a complete set up then I'd look into the Driving Force GT (the above wheel) as it has some solid features such as 900 degree rotation, paddle shifters (they're just buttons but they get the job done), pedals on their own axis (so that the brake has more resistance than the accelerator), pedal spikes for carpet retractable if on a hard floor and rubber stops, solid clamps that are adjustable for thicker than average tables etc.. and as I mentioned before, very high levels of torque. The wheel has a very strong desire to return to the centre and is 11 inch instead of the usual 10.
Here's a review, even if it isn't compatible you can see what you should be looking for in other wheels:
I'll go searching for other wheels for you, I got the Driving Force GT for $115 Australian but they retail for $300 so compare the features with other wheels on the market and what you're willing to pay.
Ok so looking into it, don't buy any logitech wheel as they are NOT compatible with the XBOX 360. You have two main options.
1. (Cheap option) Go with the official Microsoft wireless wheel. Not sure on how good it is though: http://forums.whirlpool.net.au/forum-replies-archive.cfm/816672.html
2. (Expensive option) Go with the Fanatec range of wheels. They are officially supported by Forza 3 and you can find more information here: http://forzamotorsport.net/en-us/news/The-Ultimate-Racing-Wheel-for-Xbox-360.htm
Hope that helped in some way :)
