My Xbox 360 is having a bit of an issue. I rented a copy of Batman: Arkham Asylum from my local movie rental store and an hour or so in, I got the disc unreadable error. I restarted my 360 again to play, and sure enough, it happened again. I looked at the disc and there were some previous scratches in it, so I figure it was that. I returned and told them of the issue. The weekend after, I bought a fresh new copy of Batman: Arkham Asylum and about an hour in it gave me the disc unreadable error again. The disc is clean and there's not a scratch on it. I figured it was my 360, but my 360 was able to play a good section of Gears of War 2 online without the issue coming up. I called Xbox and they suggested to try playing it on a different 360 and it worked. I tried to play Mass Effect and I got the error. I called again and they said to play my 360 without the HDD, because it maybe a HDD issue. I played Mass Effect for 4 hours without an issue. I cleared my cache on my 360 and Mass Effect worked for a day and I booted it up today and immediately I get a disc read error within 15 mins of playing it. So, now what do I do? Any advice or plausible solution would be good.

I have also had the issue of getting the "disc unreadable" error on multiple games that used to work fine.  Both times Xbox support told me my disc drive was broken / dying and I had to send it in for warranty repair / replacement.  It sounds like your disc drive is dying and will have to be replaced at some point soon too, I'm sorry to say.  I've got no ideas otherwise as to what might be causing your issue.

I had a really similar situation happen just before the release of Halo 3.

Here's the good news: with the 360's ability to save entire games onto the HDD, you might be able to bypass the situation (though inconveniently) by downloading the games to the drive. It's going to take some space, and obviously you're not going to be able to swing a plethora of games at once this way, but if you have one you're really dying to play--Batman, in your case--you could rip it to the drive and see if that option works.  
 
The bad news: there are several causes for this error, none of them are easy fixes. The three predominant causes are:  
   
-- The HDD is failing. I don't know the science or techno-jargon behind the HDD's correlation to the 360's capabilities, but there is a significant one.  
 
-- The internal laser is starting to burn out. It's not dust in the lens or simple build up, but the stress of reading games has taken its toll on the disc reader itself. 
 
-- (My case.) There is a small, elastic bit holding the drive's bearing together. Significant heat over long periods of use cause the elastic material to weaken and, eventually, snap. When it snaps, the disc drive cannot spin the disc and the 360, therefore, cannot read the disk. Theoretically, this is the easiest of the three predicaments to assuage, and there is a way to super glue the bearing back together and repair the drive.  
 
THAT SAID, doing such an action requires you to open the casing of the 360, which voids Microsoft's repair warranty. Not advisable, honestly. But if you're sure of the cause (which you aren't), then I suppose it's possible to fix it at home for very little charge and effort.  
 
Question: Does the error message come after the game boots up, or does it straight up tell you in the dashboard that the disc is unreadable?

The game plays for about an hour or so then a message comes up in the middle of gameplay. Many times when I perform an action. Like in Batman, using the Batclaw to open the vent in the Batcave. So I guess, after the boot up.

I have a new arcade (well 3 months old) and I got a drity disk error today playing a brand new copy of MUA 2. Luckily it didn't happen again at the point it failed previously. Hope you get it worked out pronto.

i have the same problem with some games, and only with my hard drive on my 360, without it, it works like a charm. and i only have the issue with one 360. i have 2  a core and a premium. my premium is the faulty one. dont know why.....no hdd no problem, with hdd sometimes problems.  and i have a brand spanking new 120g hard drive???  my best advice is to  install the game to your hdd

UPDATE: I did a cache dump and went to delete my batman files, but I found a exclamation point file in the batman game save. It had to do something with the cache so I deleted it. It may have fixed error. I'll let you know tomorrow.

Just got Halo ODST through the post, popped it into the xbox and started to enjoy the intro etc ...
Big smile on the face!
 
Then, upon loading the first mission of the game - BANG - "Disc read error"  (Disc is brand new and spotless)
 
Restarted xbox and SAME thing again ...
 
Installed game to HDD and it worked, played the first "open world" mission.
Smile on the face, again!
 
Found the first "object" to trigger a flashback mission and - BANG - "Disc read error"
 
No more smiles ...
 
Going to phone MS and see what they say.

Seriously this fucking sucks.
 
MS just told me what we all guessed ... Its out of warranty / not covered by the 3 years extended.
 
With my PS3 failing to boot up every other day and now the xbox is having trouble reading discs ..
 
Why don't they make consoles like the good old Sega Megadrive / Super NES ?????????????
 
Fuck you MS, fuck you Sony (Bungie make ODST for PC !)
Back to PC gaming .... ----------->

ya i waited out front of gamestop till 12 last night with my friends for halo odst and the same fucking thing happened. 
i tried it on mine didnt work
tried it on one friends xbox 360 and it didnt work
but when i tried it another guys xbox 360 it worked.... WTF!! HOW DOES THAT MAKE ANY SENSE!! FUCKING BULL SHIT!
what is the fucking problem!! uggghhh

Try cleaning your cache. It's in Disc Options under Memory. Then check for any files that don't belong like a exclamation mark file or any video files that haven't played in a while. Video files can get corrupted. Hope this works.

My Halo ODST disc goes unreadable too before the first mission like you guys and I downloaded it to my HDD like you guys and same thing. Could something be wrong with ODST?