UPDATE: With the announcement by Microsoft that there is an "unacceptable" rate of failures with the 360, the warranty has been extended to three years for repairs. As a result there have been changes to how the repair process work and the waiting times for repairs since the time I originally published this post. As time goes by this post will likely become more inaccurate as Microsoft continues to deal with the failure problem. The following is a description of the process I went through (two times now) but it should be noted that it may not resemble exactly the current repair process. I have modified this article several times to reflect changes in the process that I become aware of.

My original Xbox 360 has died two times now, displaying the feared Red Ring of Death. The first was before the warranty extension (and prompted the original writing of this article) and the second was more recently (December of 2007). As a service to others I cataloged the repair process so one can know what to expect. It should be noted up front that Microsoft will repair your Xbox 360 for free if it is still under warranty (which has been extended to three years from the date of purchase for cases where the Xbox shows the hardware failure "three flashing red lights") and they will pay for shipping to and from the repair facility, as well as providing shipping materials. In addition, they are offering to refund the repair charges paid by anyone whose Xbox failed in this manner before they extended the warranty. This guide was priginally written before the extension to the three year warranty but I have tried to update it with the changes I noticed during my second repair. Still, your mileage may vary.

1. Confirm that your Xbox 360 is really dead or dying. If it has suffered a hardware failure and died completely, it will show three red lights on the ring of light. If it shows four lights then you have a problem with your video cable but the system itself is probably okay. Microsoft has two relevant knowledge base articles to turn to when you system is failing but not yet dead: Xbox 360: The screen freezes (KB907586) and Xbox 360: Three red lights flash on the Ring of Light (KB907534). Consult them to see if there are any steps you can take to fix the problems you are having or determine if you have a bad component other than the system itself (a faulty hard drive or power supply, for instance).
   
   
2. Check if you Xbox 360 is still under warranty. Microsoft announced on July 5th, 2007 that "Any Xbox 360 customer who experiences a general hardware failure indicated by three flashing red lights will now be covered by a three year warranty from date of purchase", meaning that they will fix your 360 for free (including shipping to and from their facility) so long as the console is less than three years old and the problem is the flashing red lights hardware failure. Although the warranty page says you need to provide a bill of sale as proof, Microsoft appears to be able to look up that information based on your 360's serial number. You can check this yourself online at their Registration, Warranty, and Repair Service for Devices page. You will need to log in with your Windows Live ID and, more than likely, Register A New Device with the system. Once you have your 360 registered, you can click on a link to it to show the warranty and repair status. The warranty status will either say "In Warranty" or "Out of Warranty". If your 360 is no longer under warranty you can still have it repaired but there will be a fee.
   
   
3. Request a new repair online. Originally you had to call support to request a repair. Now you do so via the Registration, Warranty, and Repair Service for Devices page. The repair request system resembles an online purchasing or shopping cart system, though there will be no cost for the "item" unless you are out of warranty. When you are finished you may want to print the last page for your reference as, at least in my case, no e-mail copy was delivered.
   
4. A box from Microsoft will arrive in a few days in which to pack your Xbox 360 for shipment to their repair facility. Microsoft uses UPS 3-day select which is supposed to guarantee a package arrives "by the end of the third business day", but mine took 4 business days (for a total of 6 days since it was shipped over a weekend). The box will contain: the box itself, an instruction sheet, a form where you checkmark what problems you were having, a UPS shipping label, a strip of tape to reseal the box, a bag for the Xbox 360, and foam in which to pack it.
   
   
5. Follow the instructions (included in the box from Microsoft) on how to package up your Xbox 360. Fill out the included form asking you to checkmark which issues you've been having (most like the "Three red lights on circle of light") and put that back in the shipping box so they know what to look for. You will be sending ONLY the 360 itself--no hard drive, no memory sticks, no controllers, no games in the drive, no custom faceplates, and no power supply. The instructions should tell you to place the 360 in the bag they supply and then into the foam packaging material to protect it during shipment. The foam packaging immobilizes the unit pretty well and seems to be sufficient (i.e. you probably don't need to throw in any bubble wrap or noodles). A strip of tape is provided to reseal the box and a pre-printed UPS label (also provided) can be affixed right over the original label on the box from Microsoft (a UPS worker confirmed that the additional stickers that get placed on the box when processed by them do not need to be removed or blacked out). Make note of the tracking number on the shipping label so you can track the status of your package as it travels to the repair center (located in Texas, at least for U.S. repairs).
   
   
6. Send your package via UPS to Microsoft's repair center. You can either have UPS pick it up (at a cost to you) or drop it off either at a UPS store/shipping center or a UPS drop-off box. The shipping is pre-paid by Microsoft (hence the shipping label provided). Although Microsoft suggests you get a receipt when you send it, the UPS worker at the store from which I shipped informed me that there was no receipt to be had due to the way they process their packages and that a tracking number should be sufficient. Thus, use whatever method is most convenient for dropping off your package (UPS provides a location finder on their site). It should take no more than three business days to arrive at the repair center, but mine took around 4 plus a weekend.
   
   
7. The repair center will receive your package in a few days and start repairs. The status on the Registration, Warranty, and Repair Service for Devices page will change to "Device Received at Service Center". Originally you received an e-mail notifying you that they received your package but during my second repair I received no status e-mails.
   
   
8. The repair center will fix your 360 and ship it back to you. Repairs seem to only take around 24 to 48 hours. Once they are finished repairing (or determining that your box cannot be repaired) your unit (or a replacement) will be immediately shipped back to you. The status on the Registration, Warranty, and Repair Service for Devices page will change. Originally they sent an e-mail telling you the unit was repaired on on its way back to you and what the package tracking number was but during my second repair I received no e-mails so that may have changed.
   
   
9. You'll receive your repaired Xbox 360 via UPS--be home to sign for it. The repair center ships back your fixed 360 again via UPS 3-day select so expect a several day wait (in my case it was 4 or 5, not the promised "3 business days"). Signature is required on delivery so make sure someone is around to sign for it. Make sure the shipping box is in good condition and that your unit hasn't been damage--my first one looked like it had been kicked around, but fortunately the 360 was unmarred (though it had come loose from its shipping foam). Your 360 will return in a plastic bag and in the shipping foam similar to when you sent it out. You'll also likely find included a nice apology letter from Microsoft and, at least in my case, a complimentary one month Xbox Live Gold membership card as a gesture of appreciation.
   
   One commentor said he received his return package via FedEx so delivery method may vary a little by location.
   
   
10. Make sure your 360 works again and reset your system settings. The 360's store system settings on internal memory. When you set your system up again after repairs it will have lost your custom system settings (though NOT your saved games, profiles, account information, etc., as these are stored on a hard drive or memory card). You will have to reconnect your controller and reset your settings. From the dashboard, go to the System blade, then the Console Settings menu and fix the appropriate settings (particularly Display, Audio, Clock, and Locale). Your 360 may also need to redownload patches for Xbox Live and various games.
    
    According to the Post Service Warranty, if your 360 is repaired within the original warranty period, "you will receive either the balance of your original warranty, or 90 days, whichever is longer." If it is repaired outside of warranty, "you will receive either the balance of your original warranty (if it has not yet expired for all conditions), or one year, whichever is longer."
    
    In addition, one commentor asked what the serial number will be. If they repaired your box, you will get the same Xbox back, so it will have the same serial number. If for whatever reason they are unable to repair it they have to replace the unit, though likely with a refurbished one. This will have a different serial number but, as far as I know, they will inform you if they did indeed have to replace your console completely.
    

Hopefully this information will prove helpful. Incidentally, I was pretty pleased with the process, at least the first time through. I thought it might be a bunch of jumping through hoops, but Microsoft did a pretty good job of streamlining it. The phone rep I talked to was courteous and knowledgeable, and didn't try to talk me into or out of anything. They shipped the box for my 360 the day I made the request, completed repairs in a day, and shipped it back the next day. In addition, they kept me updated, and the letter and gift card were good customer relations. My only real big complaint was with the use of UPS which was way slower than, say, the Postal Service. I noted this fact in my customer survey.

The second repair, which occurred after the announcement of the three year warranty, was almost as good as the first in terms of service. It was quicker than I expected--I had it fail around Christmas and I still got it back in only a few weeks. I didn't have to call customer service to put in a repair since its automated now, which cut down on the hassle of dealing with the phone system and having to troubleshoot with the rep. My only complaints would be that Microsoft doesn't have a full guide on their site about this process (hence me writing one) and the fact that this time, for whatever reason, they did away with the update e-mails. It's reassuring to get an e-mail each step of the way to let you know that your precious gaming machine didn't get lost in the mail. Hopefully they'll improve this and bring back the status e-mails they used to send out.