I am now the proud owner of a third Xbox 360 system that has crashed, a system that I had just received this very day. Once again, my Xbox blew up from an Xbox Live Update. Livid, I called Microsoft support, to which I was greeted with "I see you have had multiple repair requests. Hang on, I'll get someone to talk to you." Why thank you, Mr. Computer Voice. I never liked you anyways.
After on the phone with Microsoft, they couldn't find anything wrong with my system and told me to send it back. I then told them that it was the third time in a row that an Xbox Live Update has fried my system, to which the representative was in shock and put me on hold to talk about this.
Turns out that my first failure that gave me the red rings fragmented my Xbox Live file. In short, every time when I tried to update the file, it would fail and just leave it fragmented. To put in simpler terms, if you have a computer that is set to boot from a floppy disk, and the disk is bad, the computer has a chance in blowing up. That's what's happening to my 360s.
Luckily I bought a new 360, but in order to solve the problem I had to format my hard drive. So, the moral of the story is watch out for these silent killers. If you ever get your system killed by an Xbox Live Update, you might have to format your hard drive. Hope there won't be any important save files that you needed. So yes, in order to save you system from continuing this problem, the only solution right now is to format you hard drive.
Spreading the good word.