I would say the X clamp design resulting in RROD.  That's obvious.  Besides that, what is the stupidest?

http://gameplaytoday.com/features/general-features/4889-the-stupidest-mistakes-microsoft-made-with-the-xbox-360

Launching without the hard drive.

Mismanagement of first-party developers

Lack of policying on Xbox Live

No controller option for Kinect

Choosing DVD-9

No Killer Instinct relaese from Rare

No Web browser

No wi-fi built in till 2010

While I think the RROD is the biggest issue. I'm also inclined to think that the lack of first party is an even bigger one. It's going to hurt their future consoles when the competition has so many AAA titles. They need to build these studios, they can do it if they wished to.

Problematic DVD drive would be second... after that, nothing comes close.

i dont get what the launching without a harddrive when the 360 launch it was 20 gb and also the core without the harddrive it always been that way  ....

But my reasons are

#1 Prod

#2 mismanagement of first party which will bite them in the ass in the long term

Mismanagement of first parties wouldn't have been so bad if they corrected it. Like, 3 years ago. But they didn't . . . great job.

RROD is my number 2. Even a console with a failure rate needs good first party support.

Dumb List here's why.

Launching without the hard drive. <- this option gave the 360 a much cheaper version and then they sold a hdd seperately which then gave them another source of revenue

Mismanagement of first-party developers <- the first-party seems to be fine imo as their 3rd party is fairly strong

Lack of policying on Xbox Live <- eh?

No controller option for Kinect <- disagree unlike the wii and move which you have to buy a fair few accessories to play properly kinect is fine out of the box

Choosing DVD-9 <- this isnt an issue

No Killer Instinct relaese from Rare <- thats not a 360 issue that is a developers decision

No Web browser <- its meant to be family friendly and browser would be against that. 

No wi-fi built in till 2010 <- G was around at that stage and N was also around but too expensive, in fact ps3 has the G and for some reason they didnt upgrade it with the slim

Yeah I agree with you on RROD. So my top 3 are:

1. RROD

2. Crappy dvd drive

3.No controller option for Kinect

I'd say your list about sums it up. 

I got one or two though!

Not buying Bioware.

And having two few exclusives.

yep letting slip bioware and bizzare at the time second party what a dumb move :(

What does "Xbox" mean in Japan again?