A refurbished xBox 360 is one that has been pre-owned, but unlike a regular used system, it has been tested by the manufacturers to make sure everything works properly. They use the exact same technology to check a refurbished system as they do a new system. So, if you get one that's refurbished, that means that it should theoretically be up to the same standards as a brand new model.
Refurbished machines are often used as replacements for xBox 360's that don't work. If you know anybody who has had to return their xBox because of overheating problems or faulty hardware, they'll get a refurbished one sent to them in return. If you're past warrantee, you have to pay for that refurbished machine, which costs $129 from xBox directly.
Refurbished xBox 360's from the manufacturer are like new. They test them the same way they test new units to make sure they meet quality standards. Some gamers have had problems with the refurbished consoles, but they are usually the same problems people have with the brand new ones, like the "red rings of death" caused by overheating. The problems with the consoles are due to some kind of faultiness from the get-go, not because they are refurbished.
Even though it's as good as new, some gamers feel kind of ripped-off by Microsoft for not replacing their new, malfunctioning units with other new units. Instead, they send you a refurbished one that has been used by somebody else. It's easy to see why that would be a little insulting.
Buying a refurbished system is only about as risky as buying a new one, but still it's probably a good idea to go ahead and pay for that extra warrantee. They offer warrantees of different lengths, and the prices for the warrantees vary accordingly.
Aside from buying a refurbished xBox directly, you can find refurbished consoles for sale on eBay and other online shops. You might be able to get one for under $100, but make sure you have a good warrantee.
There have been some stories about people buying refurbished machines off the internet (not directly from the company) that had some cosmetic damage, or that had some minor problems, so buyer beware. Any time you buy anything off the web, make sure you are dealing with a reliable dealer and there is some kind of warrantee or money back guarantee.
There are also lots of stories out there about gamers having trouble with their new xBoxes, sending them back, and getting refurbished machines that didn't work any better. Again, this is due to a problem with the system's design. It can't be stressed enough: get the warrantee. Shell out the money for the longest warrantee and make sure you are covered in case anything happens.
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