Im back from the beach (farewell spring break) and the xbox is FIXED! Me and my dad were sitting around while my mom and brother were on the beach, and he offered to help me look at it since he is a mechanic for Duke Energy. After analysis he noticed that the game discs weren't spinning at all. He lubricated the motor insided the CD drive and now it works good as new!
Microsoft is full of so much crap for trying to charge 100 bucks to lubricate a motor with cheap oil and then send it back to me. It feels nice to be able to play halo and RE5 again.