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-Do not place the 360 on a soft, cloth surface. Always set the console on a hard, uncluttered surface to ensure proper airflow to the interior of the console.
-Never place the console on top of another device, such as a cable box, entertainment system or DVD player that generates additional heat.
-Never place your console in a tight, enclosed space. Bookshelves and confined shelves within an entertainment center are not the right location. The Xbox 360 requires open air to ensure proper airflow to the interior components.
Do not place your console over (or near) an air conditioner or air conditioner vent. The contrast between the cold exterior air and the hot interior components can cause condensation within the unit. This liquid can short-circuit the console, causing damage and even fires.
-Never place your console inside a freezer or refrigerator to cool down. The extreme temperature difference can crack the motherboard, speed up the deterioration of the solder and force the GPU out of contact with the motherboard.
-The power supply should be placed in an open area with plenty of ventilation to help ensure heat distribution. Never cover the power supply or place it within a confined space.
-And keep paddles, games, instruction booklets, and any Xbox Live membership cards in a safe place. You can put them in the same box that you received your system in as well!
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Heres a video to fix 3 red lights: