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1. The problem is probably the TV. The issue with less expensive HDTV's, is usualy the upscaling of SD. (The HD images usually look close enough to feel the same in your home)

2. Yes

3. No, You can get HD out of the Core, just buy the HD cables.

4. No clue.

5. He is wrong. The 360 will do 1080p in games. (just not movies if you have the HD add-on and no HDMI).

Congratz on the TV!