Sorry in advance for the wall of text, but, here is my story.
Two days ago I had started up my original Xbox 360 20GB console and everything seemed normal; same gamerpic, same gamerscore, and same fully dressed avatar. Then I used my used my Xbox live pass code to connect to Xbox LIVE; when it connected it asked me to choose an avatar. Upon further review, it appeared that my profile had been wiped as I had no gamerpic and my achievements we at 0. Not knowing what was going on, I turned my console off and tried again. I did this 5 times and got the same results every time. On my last 3 tries, my Xbox froze when using the controller to turn the console off and had to push the power button on the console. I then proceeded to start my console up again and play games while disconnected from Xbox LIVE and everything seemed back to normal.
Fast forward to today.
I started up my console and continued to have the same problems as the other day. Except now it freezes every time I try to turn off the console. Thinking I had a problem with it freezing, I checked these forums and followed the step-by-step guide: when it freezes and I press the Xbox button on the controller a sound is played but nothing happens on screen; the console is already in a well ventilated area with nothing surrounding it; I cleared the system cache; and I removed the HDD, this did seem to make my Xbox run better, but, I could not reproduce the freeze problem since I couldn’t sign into LIVE with my profile.
Annoyed, I figured I would play games while disconnected from Xbox LIVE like I did the other day. Except now when I start a game I lose my gamerpic, achievements, and avatar. The game plays, but, it would not let me save my progress. Checked the forums again and figured that my profile may be corrupt. After restarting my console because it froze again I tried to recover my profile from Xbox LIVE; when it signed me out to do this, I thought it had froze again, but, it turns out that my console was acting very sluggish. When I did finally manage to connect to Xbox LIVE it told me that I had to download an update to do it, and that I had to try again later because there was a problem downloading the update. I tried this 4 times and had to turn the console off each time because the console would get so sluggish.
Thinking I did not have enough room on my HDD for the update, I then tried to delete a game I had installed to the HDD along with a few other larger DLC items. After trying to recover my profile, failing, and restarting my console yet again I noticed that the items I thought I had deleted still showed up. I then tried to delete all of the profiles on my HDD only to have them back after I restarted the console.
Still not knowing what is going on, I took the HDD off, started up my system, and plugged in an empty 4GB USB drive that I had previously formatted. With this, I was able to sign in to LIVE, download the update, and recover my profile without any problems. I put my HDD back on and, using the recovered profile on the memory unit, I was able to sign in to LIVE and play games; however, my console continued to run very sluggish. So, I moved a few save game files on to my USB and tried playing with just the USB and no HDD. Everything seems to work perfectly fine like this.
So, that is where I am at, and, I still do not know exactly what is wrong. I am now under the impression that the problem lies with my HDD. Am I right in thinking this? Is there any way to fix this or do I just have to buy a new HDD?