Turn on the Xbox 360
Press the Guide button on the controller
Go to Settings
Select System Settings
Select Console Settings
Select System Info
Note the console serial number if needed
Go back to the System Settings menu
Select Storage
Highlight Hard Drive or the storage device you want to reset
Press the Y button
Select Format
Confirm the format
Enter the serial number if prompted
Wait for the reset to complete
Restart the console
Set up the Xbox 360 again from the initial setup screen