What is the manufacturing date on your console? I have 2 other 360's, one made 8/2006 and the other 10/2006. I recall alot of hard drive problems with the initial shipments of 360's.
Costco is great with their return policy. I am on my 3rd xbox 360 in 4 days. Yes, 4 friggin days. The first one had a hardware error forget the code. The second one had the e67 hdd error. I bought the 3rd one yesterday. I had them watch me open it at the store, plug it in and all seemed ok. Got it home, started it up again, tried to sync the controller with the console, E67!!!!!!!!!!!! All 3 had manufacturing dates in November 2005.
From what I can guess, costco had them piled in a warehouse somewhere and am bundling them with Forza Motosport 2 to get rid of them. If the manufacturing date was more recent I'd just call microsoft for a new hard-drive but I am not keeping something made back in November 2005.
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