This happened to my 2nd 360, but as soon as i turned it off, checked the ports and connections and reset it it worked and i assumed that it was just some kind of meagre connection error. It was shocked when i looked in the manual and found out what 3 lights meant. Im sorry to say that your 360's days are probably numbered, no matter what you do. hell, i even put freezer bags near it when it was on... three weeks later the console just sorta went pop, taking my DVD player down with it (It overheated so much it fried something in the DVD player). my advice is to put it somewhere away from other appliances and try and enjoy it while you can...
I hope for that mine was an isolated case, but 360's are notoriously shoddy machines.
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