Xbox 360 freezes at startup screen, audio still works, input does not

My wife and I have two xbox 360s, and recently hers (which is also the oldest) started doing some strange video glitching. I have a dlna server set up in our house, and two days ago, while watching a movie through our dlna server to her xbox, the video simply froze. The audio continued to work, and we could hear our controller input working (pressing the jewel resulted in the proper noise, etc.). Let me be clear, the video froze, it did not go black. We just figured part of the xbox software froze, restarted the xbox, and it worked fine.

The next day, same issue happened while watching something over dlna, however, this time, restarting the xbox did not work.

Now, when I boot the xbox, the video freezes after a few seconds of the startup splash screen. It goes through all the audio/music of the boot up process, however, the controller is unresponsive (pressing buttons/joysticks does not result in any audio).

I've done a few troubleshooting steps:

1. Unplugged everything from the xbox (including usb wireless, a usb stick, hard drive, power, and video), and replugged in only the power and video cable.
2. Started the xbox from a wired controller, while holding the Y and Right Trigger buttons, which some forum posts suggested would reset the video settings.
3. Used the same power and av cables with our other xbox on the same tv to see if it were an issue with the cables.
4. Attempted to boot up an xbox 360 update as described on the xbox.com update page
5. Opened the xbox, and used canned air to clear out any dust from the inputs, heat sinks, and components. I also checked all the capacitors for any bulking or leaks, and everything looks fine.
6. Used the same tv and cables with a second xbox 360, and everything works correctly.

None of these have resolved our issue. Coming from a software developer background, this doesn't really look like hardware failure, only because it is both displaying some video and audio, and I'm more thinking it's some sort of software problem that we triggered.

For some background, we've been using my dlna server for about 6 months now, and had no problem until now, so I'm not 100% sure the streaming caused the bug, it's just what we have been using that xbox for recently, so it's just happenstance. We've used the other xbox for streaming, too, and haven't had any issues.

This is also a first generation xbox 360 (from 2006), so it does not support HDMI, and it is indeed old.

Has anyone else encountered this video freeze and unresponsive controls on startup, or while using the system video player? Any suggestions for a fix?

Edit: Here is an image of how far it gets in the splash screen (taken with my phone):

I realize that this is four years old but maybe it will help others.

When the Xbox360 starts to get graphical glitches like that where it sounds as though everything is still working and it is only the video that is affected, the culprit is a chip on the mainboard which is experiencing a bad solder connection. This is NOT like the regular RROD that is caused by the chips under the heat sinks; this chip is much smaller and is usually located somewhere near the video cable plug. Additionally, it is easy to test to see if it is this chip; just turn on your xbox360 with the case open and push down on the chip with your finger. If the glitches are affected when you press, this chip is the problem. You can easily fix this chip using a hot air gun and some tin foil to shield the rest of the xbox. Keep the gun on the chip, moving in tiny circles, until the solder is melted. (30sec-1min?). Let it cool, then see what happens when you boot. Should be fixed. This is ONLY applicable when the video output seems to be the only thing affected, as in your case. Sorry I do not have a chip name or pictures. I'm just writing this off the top of my head and since the question IS 4 years old no body would probably want them anyways. :)