When buying refurbished or used xbox 360 units make sure you are buying from a respected seller. Preferably one offering a Square Trade warranty as well as one the seller may offer. One of the most IMPORTANT questions to ask: DOES THE SELLER VERIFY THAT THE UNIT HAS NOT BEEN BANNED FROM XBOX LIVE & WILL THEY PROVE VERIFICATION BEFORE THE PURCHASE!?. As far as I am concerned all sellers should HAVE to VERIFY this part. I myself got burned by a Well Known Big Box outlet here. If the seller does not prove verification & you do purchase a unit from them anyhow, make sure they will let you return the unit if you receive it and find out it has been banned.
I believe this is a bigger issue here than most know about.