I have 1 core system from launch in my living room, 1 brand new arcade in my bedroom, and a pro refurb from gamestop in my office. The refurb had over a year warranty when I registered it on microsoft's website and its still going strong. My launch core system has RROD'ed 4 times on me and even though it is years past warranty, microsoft STILL fixes it for free. When you go to microsoft's website and file a repair, the service fee drops to $0.00 when you select "three flashing lights" or "e74" failure, even if its out of warranty. So unless MS has caught on to this flaw on their website, you can get it fixed.
As for this "deal"... everyone is right, I would cancel your order and get a new arcade from amazon, ESPECIALLY now that you can use USB memory. Another note, if this is NOT a microsoft refurb, and someone else repaired it, you are shit out of luck if it breaks.
If anyone is wondering why I have 3 xboxes: Thanks to cheapassgamer.com, blockbuster B1G1, and gamestop power trades, I hardly paid anything for xboxes #2 + #3. Having netflix streaming on all of my TVs rules.