Thanks for the advice.
I took it back this morning and they let me swap over the harddrive so i was quite pleased, took about 30 mins off messing around but atleast they didnt bother testing it.
Got home with the new console, powered up, no picture on screen and the pad didnt connect, just keep flahing all quadrants RAAAHHHHHHH
One hour later i arrive back in the store, this time they do test it and get the same results on two TV's, again they swap it and let me keep my HD, took around 40mins this time.
At least number 3! SEEMS to work ok so far, but im not atall impressed with the MS Testing/QA of the machines, very poor imo. Also all the returns must be costing MS a fortune!
Edit: No idea what the faulty machines Date was but this one is 05-02-2006