Cyber-Slig, what did you expect, the full 40 pounds back? You should've asked them how much they'd offer you for it, and go try other shops too, for example Gamestation. They offer the price they're told to offer you for it, its not their personal judgement. I think your idea of "rip off" is very different to mine
I recommend Gamestation.
As for the XBox thing, just keep cleaning it and trying it.. Maybe the lens is a bit mucky? I'm not sure.