I had an issue when I played a dvd the screen you go all jumpy.
I found an older string with the same problem. With help from the xbox support team over the phone. A solution was found.
The problem is that the sscreen resolution keeps changing between 720p and 1080p. The way to solve this is to change the screen detection from auto to hdmi and change the resolution to 720p. This will then solve the issue. You can then change it back to auto with 1080p and dvds will now work.
I hope this helps anyone else with this issue.