Fixing the RROD isn't a simple thing to do. The first thing you have to do is take out the processor and replace the existing thermal paste with something decent like Diamond or Arctic Silver. They're expensive (about $20 for a tiny tube), but well worth it. Then what you've got to do is make sure that the heat sinc is attached to the board well. To do this, you might have to drill some new holes and/or replace some screws. You may also want to consider replacing the cooling fan (I would if it were me) with something that could circulate the air better. I've never done an XBOX 360 before. This is just what you do when a computer is overheating. For example....the Dell XPS 200 series had some SERIOUS overheating problems. The thermal paste sucked and the fan was pitiful and prone to failure. I've seen so many of those come through here.
The problem with the RROD is that the system is getting overheated. You can try to wrap it in a towel or keep the room cool but the fact of the matter is that the processor is getting way too hot. Even if you do all the above steps, the processor used in the 360 just runs really hot. You shouldn't operate the machine in temperatures reaching above 75 degrees Fahrenheit. Basically to fix the RROD forever, you need to replace half the cooling system and the thermal paste. MS really effed this one up bad. Cheap b*******.
I should mention that I've done extensive repairs to PS2's (both the regular and the slim models) as well as Ipods and XBOX's. Despite this, the XBOX 360 is a much more complicated machine and is therefore much more difficult to repair than older consoles. Even after doing this, your system could have been permanently damaged from the heat and may have other issues. Replacement of the CPU and/or GPU may be required if excessive damage has occurred. Replacing complex onboard components are way out of this little explanation here, so I won't go into that.
