Over at Joystiq, it looks like they were able to fix one of their minor problems by going through a set-up process.
I shut the 360 down, reattached the HDD, and turned the console back on (using the controller). This time, everything really was all good. I called my homeboy and fired up PDZ for a couple missions of co-op. Repair cancelled.
It looks like all he did was remove the hard drive and memory card, and go through the initial set-up process, nothing amazing, but it worked and that’s all that matters. So before you go send your Xbox 360 away, you might want to give it a go.