I had the same problem, but i found a fix.
I have had the same problem with many games. Bioshock and Halo 3 both gave me the same error. First i thought my X360's dvd-drive is faulty and i send it for repairs. When it returned the same problem continued.
I then replaced both Bioshock and Halo 3 discs and the problem still continued. Then i tried without the Hard Drive connected and both games work. Then i tried resetting the cache, which didn't help, and after that i formatted the Hard Drive, which didn't help either. Only by disconnecting the hard drive the games work. Now i bought a 512mb Memory Unit and im saving my games with it until i can get a new hard drive from the repair center.
I suggest that people who have this problem try starting the game without the hard drive and report of their findings.