It is indeed the Xbox 360. Open the DVD tray and near the front of the tray you will see a small hole. Feeling it lightly with your finger may reveal that the edges of the hole are not smooth. I then looked at the DVD. The scratches matched the location of the hole perfectly.
So, I took a knife and started slowly scraping plastic away. Not in chunks mind you, just lightly running the knife over the hole and its surrounding area. Then I placed the tip of the knife inside the hole and spun it a little, again very lightly. Then I went back to scraping away. The idea is to make the area around the hole a quarter of a millimeter lower than the level of the rest of the tray.
It's been 3 days so far, I have been playing extensively and not even once have I had to restart the game due to "disk unreadable." In fact, just a few minutes ago I took the disk out and looked at it. No scratches, no marks, no scuffs, no dings, no residues, no nothing. The disk is absolutely perfect.
So, should you want to venture this way, I would suggest you do it carefully. Dont press the knife hard on the tray. Just hold the blade at a maybe 75 degree angle with the surface of the tray and lightly "shave off" the impurities. I can't guarantee you'll have the same result as me, but I have already enjoyed 3 days without errors and I do hope you get the same result.
Oh yea, if this is indeed the culprit, please do *** at Microsoft for their crap quality control....