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Mystery solved!
Took it to the store and finally solved the mystery of why the xbox does that christmas lights thing. The reason is that the chip sometimes moves out of alignment and hence the ground wire is perhaps detached. The installer said that this happened to many xbox's already. The simple fix is to make sure you solder the chip and make sure it's grounded. Only me and AX seems to have this issue so it seems like an isolated issue. Just make sure the chip is properly grounded. Also check all the connections just to make sure.
After the chip was grounded for sure, the xbox started up fine everytime. AX, tell me if you still have problems!
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