If your system shows the two red light error code, your power supply or your system may be overheating. Many users have reported that their systems would overheat, then crash and produce the red ring error when the system booted back up. Consult the Heating Issues portion of the Microsoft guide for details on dealing with heating problems.
Diagnosing heating issues
The best way to check if you have a heating issue is to unplug your console and power supply for one or two hours. Once you're certain it has cooled, turn you X360 back on. It should work fine for a while (anywhere from 15 minutes to 2 hours) and then will most likely either freeze or crash with an error code. If your X360 doesn't run after it has cooled, then it's likely that you're experiencing problems that aren't related to heating.
Heating issue troubleshooting
Check to make sure you're system is in a properly ventilated place. Putting your system inside a sealed cabinet or drawer is not a good idea, as it will likely cause it to overheat and crash due to poor ventilation. It's best to keep both the X360 and the power supply on an open shelf where it can get good airflow and cooling.
Check to make sure that both the intakes on the side and the exhaust in the back of the X360 aren't covered by any nearby objects or have inside dust, as that will also cause heating issues. If you feel that the intakes or exhaust have too much dust, clean them off by blowing them with canned air.
Try to run your console in a vertical position. The added surface area should help assist with cooling. If you're still encountering problems, use a fan to blow air onto the X360. Make sure that the fan isn't blowing from the back of the console, as that would actually inhibit cooling.
Cooling your power supply
Sometimes the X360 power supply can overheat and cause the console to malfunction. You help it cool by lifting it off the ground and allowing more air to flow over its surface. The easiest way to do this is to place two 1-2” blocks on both sides of the power supply and then place the power supply on top of the blocks so that as much air as possible can flow under it. A possible alternative to blocks is a small cardboard or plastic box you can position to span across your power supply.
http://www.wikixbox360.com/page/Troubleshooting+FAQ?t=anon