I feel for you, Ferrarisimo. I have a launch XBox that did that sporadically.
Finally on Labor Day when I'm off of work and want to play some games, it wouldn't load anything but music CDs. ("Rip Music to Hard Drive?" NO! Play games, dammit!)
So I call MS, and they are "repairing" it under warranty, even though it's four years old. Give 'em a call. This would be a really bad time for them to have negative press, as the 360 launch looms, so they may be pretty amenable to helping you out. It cost like 20 bucks to package and ship it with insurance. Better than spending 149 on a new one.
Good luck!