I'm going through the same thing. Try this:
1) flip the switch on the back of the 360 from HD to TV (I think that's it). It will make it 480i
Does that work? If so.... change the resolution to 1080i and make sure it works.
2) Do you have the red cables connected properly? One is for audio, one is for video, and they aren't clearly labeled.
My solution was to just use my receiver's HDMI output, and ignore the component, but I'm seeing the same thing.
This should probably be in the XBox area.