Was the 360 turned on when you turned it from vertical to horizontal? I know that turning most devices from horizontal to vertical or vice versa with high-speed reading/seeking may scratch disks, but I've never heard of the hardware itself failing.
Well, I found a link to protect against it from happening in the first place, but since it already happened, you may want to check out your laser
http://www.llamma.com/xbox360/news/X...-Scratched.htm
Hybrid Mode
