Here is some info and troubleshooting steps for one red light.. http://support.microsoft.com/kb/941377?sd=xbox
If that does not work you will most likely will have to call into Microsoft at 1-800-4MY-XBOX and talk with a tech.. they might need to setup a repair.
Here is some info about paying for a repair
This one is if you are in warranty- If we repair your Xbox 360 within the original warranty period, you will receive either the balance of your original warranty, or 90 days, whichever is longer. In addition, we will pay for the shipping both ways.
This one is if you are out of warranty - If we repair your Xbox 360 after the warranty period has expired, while you will be responsible for the repair costs, you will receive either the balance of your original warranty (if it has not yet expired for all conditions), or one year, whichever is longer.
Basicilly if you pay for a repair you will also get a One Year Warranty on whatever console you get back
Here is a link with for the info I got Link
Make the best use of what is in your power, and take the rest as it happens.