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I would try to get the 360 fixed by Microsoft for free.  My 360 crapped out 6 months out of warranty and I basically said they don't want to screw someone who bought a launch console and has bought 90% of his games new.  They fixed it for free, so give it a shot.  Mine died playing Bayonetta but luckily I had a friends 360 so kept playing till it got repaired.