I'm not a fan of MS's customer support. I don't own a 360 btw, but was rather browsing these forums looking for people complaining about 360 defects to make myself feel better about choosing not to buy one (yes, im a sadistic bastard...sorry). Anyways, I own the original XBOX and one day (suspiciously after playing Ghost Recon 2, which I'd rented, and later read that other people had similar issues after playing the same game) my system gave me an error upon boot and it turns out it was the HDD. So I called MS and they said it was 80 dollars plus shipping. Now, I was pissed because I was literally JUST out of the warranty, and as a result, a system that was pretty much brand new aside from a fubar HDD was now useless.
I called 1800MYXBOX or whatever, and the first tier of support did nothing for me. They offered me the bottom line and that was that. I called at least twice more, and while technically they didn't have to do anything to help me (since I was out of warranty), if they DIDN'T at least make ONE concession for someone who had just 4 months ago spent 150 dollars on what is supposed to be free of defects for 3 months, then suddenly dies, I was going to just crack the damn thing open, mod it, and put in a new HDD.
Anyways, I finally read on a forum that you need to ask to speak with a higher tier of support, and I tried that on about call #4, and lo and behold I got someone who had some power. He said that they actually have a 6 month period within which they'll only charge 40 bucks and they even threw in free shipping. All of a sudden I didn't really have a problem with XBOX customer support.
Fast forward a year and half and I had recently bought an XBOX Wired Controller to use with my PC. I start messing around with it, testing all the buttons for defects and at first it feels perfect and I was stoked...then I find that the d-pad is offset, or at least, not properly lined up with the rubber buttons underneath, and so the left direction was screwed up and if I pressed down hard it popped/clicked...I was bummed...especially because I had left the receipt at home and come back to college...
I called customer support again and transferred to the accessories support. I explained the problem, explained my receipt-less situation, and said I'd like to exercise my warranty (the damn thing was a week old). She said that they don't handle the controllers individually, just in relation to the system (to which I said to myself "wtf?") and then she, honest to god, told me to take it to WalMart and return it. I asked why WalMart, and she said because of their return policy, and also because
any store that sells MS products has made an agreement with them and whenever an MS product is returned, it eventually goes back to MS, so its analgous to returning it to MS (as long as you abide by the store's return policy of course)
And so I really don't care for how MS handles stuff. They have a very hands-off customer support, you have to squeeze them to get the customer support you SHOULD get, and sometimes they just outsource all the work to another company.
Good luck dude...if I were you I would use the words "Better", "Business", and "Bureau" in that order the next time you call. And remind them that you paid full price for a NEW and UNUSED product that was suppsed to be FREE OF DEFECTS. You did not pay for a defective refurbished product. Tell them they need to send you a new unit, now.
The first XBOX I bought was an official MS refurb. The damn thing froze after 15 seconds of playing any game. Trust me. Play dirty with them, be aggressive with them, and make sure they remember that you're the

ing customer and that YOU'RE in charge.