The RROD (for anyone unfamiliar) is an error code shown on the front panel of the 360 that has 3 of the 4 quadrants of the ring showing a solid red LED, with the northeast quadrant left blank. Along with the red LEDs you also get no video and a paperweighted Xbox.
The problem was caused by a faulty design that caused the motherboard to make poor connections with the CPU or GPU after exposure to heat/stress. This problem was created when Microsoft decided to use X-clamps to hold down the CPU and GPU heatsinks, which tend to warp the motherboard over time.
The fix involves taking apart the Xbox (yes, this does void your warranty if you still have one but will not jeopardize your XboxLive account as you will only be replacing non-electronic hardware inside the box) and replacing the X-clamps with plain old bolts and replacing the crusty old thermal grease with snazzier thermal grease.
1. Take apart the Xbox.
2. Remove the X-clamps and posts on the bottoms of the heatsinks that insert into the clamps (with a pair of pliers, they are threaded)
3. Wipe off as much of the old crusty thermal grease as possible from the CPU/GPU/Motherboard.
4. Coat the components you cleaned off with new Arctic Silver thermal grease and bolt on the heat sinks with proper bolts and spacers.
5. Leaving the cover off and DVD unplugged, turn on the Xbox with the fans blowing on the exposed heatsink and let sit for a minute or two until it overheats (red flashing lights) then IMMEDIATELY power off.
6. Tighten the bolts again if you can.
7. Reassemble the Xbox and hope your time and $14 spent was well worth it.
A perfect video (with part numbers visible for the bolts and washers) can be found
here
If your machine is out of warranty already and you aren't afraid of digging into electronics give it a shot.
DS