what do they do to fix it?

do they try to fix the old one or just send you a new console?

and how reliable is it after you get it back?

I'm not sure exactly what they do. I believe they replace the whole motherboard. The red rings are caused by melted solder...or something, and it's usually not fixable.

Mine's been working well for almost a year now.

You can keep the hard drive, so don't worry about losing data. Mine came with a different DVD drive, so I assume I got a new/refurbished console.

I havnt got a Xbox but i have a mate who has one, his still under the illusion that its better then PS3, anyway I agree with the guy above me, its due to Melted circits. My mate just sent it to microsoft and got it back within a week or so.

ya i like da ps3 better
but hey i got it for free
it was my friends and it broke
he bought a new one and was about to throw to throw it out
so i took it