I had a similar problem when I first connected my son's xbox using the Audio/Video cable (red, white, & yellow connectors). I connected the cable to the TV correctly, but incorrectly selected "component" as the input on the TV setup. Result was black and white display. Switch your TV input mode to "AV" or "Audio/Video" and you will get color.
FYI, "component" TV mode is only used with devices that use the red, green, & blue connectors.
Take it back to the store its obviously defective
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are tv shows and movies in black and white?
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