I got home yesterday, and my kids are playing the Xbox. My son puts in Hot Wheels Beat That, and after the opening video plays and the title page appears, he says, "Why is the Xbox all fuzzy?" Indeed, the picture looked like it was coming over a bad analog broadcast over a pair of misaligned rabbit ears antennae (anyone remember those?). My older son comments how it looks just like the Xiis are displaying on the dashboard, all snowy and semi-transparent, and my wife says it must be some new feature of the dashboard.
Oh, it's a new "feature", all right, I think. Failure in rendering of 3D elements, where 2D elements such as videos and most of the dashboard are fine? Yeah, I've seen this before, right before Xbox #2 started booting up with an E74 error.
My kids play for a while. Most of the game is fine, but the signs with arrows guiding their Hot Wheels cars around the track show the same "snowy" overlay. And when they are finally done and quit to the dashboard, sure enough, the Xii is standing there, fuzzy and see-through, like a hologram on the fritz. I cycle the power, expecting to see a multilingual error message and a single red light. To my surprise, the box actually boots, although the boot animation shows some fuzziness in places. I then power down the box, and we go to have dinner.
Once the kids are in bed, I power on the Xbox, only slightly hopeful that maybe, just maybe, I'll be able to break the shrinkwrap off my Father's Day gift and play Ghostbusters, even if things are slightly "snowy". Alas, it was 
not meant to be. The lower right quadrant light was flashing red, and the screen displayed "System error, Contact Xbox Customer Support" in various languages, with E 74" displayed prominently at the bottom. Removed the hard drive, tried rebooting — of course, no dice.
I then took the hard drive up to my office and hooked it up to my PC using an X360USB adapter to back up as much data as I could, just in case. I didn't get as much as I would've liked, considering I started late (it took me some time to find a version of Xplorer360 that would read a 120GB drive), I didn't have a lot of free space on my desktop (I still have some home movie files I need to burn on DVD taking up hard drive space), I couldn't easily pick and choose what to back up (the 360 doesn't use easily-recognizable filenames), and I couldn't just select everything and let it fly (not only did I not have enough space, but Xplorer360 copies everything to your system temp directory first, which is on my undersized C: drive, before moving it to your target destination; I couldn't just copy everything to my data drive directly). I ended up just copying the profiles and calling it good before I fell asleep in my chair.
I then took the hard drive back to the 360 and turned it on, just for kicks. It powered on, and oddly enough, everything looked fine. It was after midnight, so I didn't want to start playing at that point, but I took some time to copy all profiles to a memory card and what save games I could (some games don't let you without logging on to the game, and some games don't let you even then). When I was done, I noticed my Xii was looking snowy and transparent again, so the moment truly was fleeting.
This is my fourth failure, and will be my second time going through Microsoft repair, as soon as I can make time to get it done. I suppose it's a good thing I haven't been able to use the license transfer tool to move all my licenses to this console.
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