I'm currently having trouble with my Xbox having complications reading the disc. I don't feel this is a disc drive problem because I can install the game on the disc to my HDD and play off that. I get 1 minute into it and the "disc read error" comes up again. Another thing to note, is I can be playing a Xbox Live Arcade game (ran directly from HDD) and it'll pop up on screen "disc read error" and take me back to the dashboard. Reading the disc should not even be occurring while playing an Xbox Live Arcade game eh? I'm thinking something is wrong with my HDD and having it connected to the Xbox is causing all kinds of problems for me. Or I could be wrong and it be something with the DVD drive.
Don't think it's DVD drive related as it occurs on Arcade games, too. Neither found that issue by googling it. Think you have to call the support and let them check it.
PS Where did you buy the HDD? Is it the one you got with your console or did you buy it online? Cause I know there are sometimes problems when buying HDDs online, most of them are not official Microsoft products if you buy them from ebay, even though you notice no visual difference.
This one came with the Xbox. It's a good 4 years old, system was manufactured in 2008. I've had other issues too. I had somewhat of a RRoD issue that came and went away, that I recently fixed with heatsinks. I just found it weird that the DVD drive would be "running" when playing an arcade game. Xbox support guy said it sounded as if my HDD was causing problems relating to the RRoD
My advice now would be to try out a HDD from a friend/relative with a 360. That's the easiest way to figure if your HDD is the problem, or if the issue is related to your console.
I used to have a lot of disc error issues. What always worked for me is was just running the xbox upside down. Not sure of the reason why it worked, but it always did. after about 2 years of that I got rrod and got a new xbox and it hasnt been an issue since