When I bought the game, I thought it was incredibly buggy, but it turned out my 360 was going to shit. Damn 360 burned out (Halo edition, bought new, so if that's any inclination of it's age) after S2 was out for about a week, bought a new 360, haven't had any real game-breaking bugs. Seen some graphical glitches here and there, some issues with frame rates, nothing too horrible. Most interactions within the code seem to work fairly well, but I have run across a quest where I was given bodyguards, failed the quest, and was stuck with the bodyguards (they wouldn't die--their HP bar would tank, then refill again).
Since bought it recently, take it back, get a new copy. Perhaps you have a bad disc.
Level me up! I, too, wish to storm the lands of mortals reaping what is truly mine...but for now, I am but a wee spot of energy...
"I embrace death without fear as I embrace life without regret."