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Had the same problem on a Denon AVR-3310 as well. With HDMI the 360 attempts to determine the capability of the connected device for both video and audio. The HDMI handshake is a fairly normal process that often seems to go screwy on the video resolution side but it is unusual for it to happen, in my experience, with audio. There's not much you can do about it ... it's a 360 issue.
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