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It still happens, but much less frequently now. I bought my Xbox almost 2 years ago with little problems.
To be on the safe side buy it from Best Buy and drop 35$ on the replacement plan, it covers you for 2 years. If you have any problem at all, you bring them the console (Keep your Hard Drive) and they will open a brand new box right in front of you, take out the HD since you keep yours, and hand you the box to go home with. I haven't had to use mine yet, but it's reassuring. And 35$ is better than 350$
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