Hi Helpme222,
This error has only appeared a few times on the 360. It does appear to be a possible hard drive problem since you are unable to watch recordings and also unable to pause and rewind live TV which is the same as recording.
How much free space is showing on your hard drive?
Recordings > Recorded > View all > It will show a percentage in the top left hand corner of this screen. You might need to delete some recordings.
One previous poster with this issue solved it because, "The white converter lead mush be a bit dodgy. Upon wiggling the cable the 360 box picture broke up. I swapped the lead for a standard f type to standard ariel adapter and that solved that problem. "
Have you tried a factory reset?
To factory reset go to Settings (the cog at the end of the Home menu) > System > Factory Reset. It's actually misnamed and only a partial system reset and not a complete factory reset. You are given 2 options
Keep Recordings
Format Disk
Normally I would suggest choosing the Keep Recordings option, which means you won't lose your recordings and any planned recordings or series links you've set up. However since you can't watch recordings you may as well choose the format disk option which will also delete your recordings and series links (if it doesn't work it will mean a replacement box which would result in you losing the said recordings and series links anyway)
You can either call Virgin on 150 from a Virgin or 0345 454 1111 from any other phone to report a fault (option 2) or wait here for one of the forum team to pick this up which might be 2 to 3 day's.