My xbox keeps saying the disc is unreadable, but sometimes it will lay, any suggestions?

If you get the error with just one game, but not others, unfortunately it is likely damage to the disc. If it is under warranty, or if you bought it at a return-friendly place, maybe you can get a replacement. If the system is giving you this error with several games, it is likely the disc reader in your Xbox. The Xbox 360 has a well-known issue with DVD drive failure over time. If your system is still under warranty, or sometimes even if not (because this was such a big problem for Xbox), Microsoft may repair it. Try calling them and patiently discussing it. If it is not under warranty, and you are good with repair work, try this: http://hardandsoftgaming.wordpress.com/2011/03/12/replacing-a-faulty-xbox-360-dvd-drive-firmware-flash-or-circuit-board-transplant/

Don't place your system vertically or it will happen again. Lay it flat on the table.

Sounds like a bad spot on the disc. Or, it could be the drive itself.
On the original xbox I had problems with the optical reader doing this same thing.
Is it only the one game doing it? Try another game on your box, and try your disc on a different box if you can.

Look here for more information: http://support.microsoft.com/kb/909819

Look at the link and try some of the suggested tips, like removing the memory units, etc. Microsoft suggests that damaged/dirty discs could be the culprit as well as discs that are from different regions; however, if your console keeps doing this with *everything* you try to play or watch, then this could be the sign of a defective disc drive, or a sign that your Xbox is about to kick the bucket. A former friend of mine complained about unreadable disc errors and then a few days later, his Xbox red ringed.

bad disc drive most likely, unless you tempered with it...could also be a bad connection

The glass laser eye is what needs to be cleaned or just open the cd/disc drawer and blow inside real hard 2 times and you should be good. Rubbing alcohol and cotton swab.

it might be scratched and you can get a tiny layer of plastic scratched off the bottom and make it playable again, at a local cd store or electronic store for price that wont put a dent in your wallet.

i had this problem with my xbox and its due to either the laser or the magnet within the disc drive that holds the disc in place. the magnet may have come loose which mean u can either open the drive up to try and reposition it, or replace the drive all together. my suggestion would be to send the xbox to microsoft if under warranty or send it to a third party company to see if they can fix it. buying a new drive for your xbox involves some very complex firmware flashing which is not advised

"A temporary solution" If u got the new xbox experience and enough HDD space, install game to HDD and then play from HDD. You'll probably have to send back to Microsoft eventually. Though make sure its only COD4 thats giving trouble, buy some disc cleaner and see if that helps

call 1-800-4myxbox see what they say, you might be under a warranty that will cover it.