It's because you're trying to run the game in progressive scan, but your Xbox isn't updated with Xbox Live 3.0 features (480p Xbox dashboard).
The remedy for this is :
Find someone who has high speed internet (or if you have it, you're ok).
Start the Xbox, but don't put any disc in, and go to the options.
Set the Xbox to interlaced only (put 480p and higher all off).
Put Fable in the Xbox.
While having your Xbox connected to the internet, choose Xbox Live in the Fable startup menu.
It will prompt you to suscribe to Xbox Live, but before doing this, it will update your Xbox to Xbox Live 3.0 caracteristics.
Just press B to cancel when they ask you to create a new account.
Remove the disc from the Xbox, go to options, set everything you want (480p and whatever), and go back to the main menu.
Press L and R trigger, and click on both analog sticks at the same time, you'll get the dashboard in 480p.
Put Fable in, and voilà, you're ready to go.