can playing scratched games damage your xbox 360?

no, can't see how

you should install games on your hard drive then it doesn't have to read the disc whilst you play. also makes the xbox a lot quieter
 
no....
but it will have a harder time reading the disc rather than a not scratched one...
 
If you play heavily scratched games constantly then the lens may try harder to identify the disk's content. If the lens is overworked then it can damage itself and you will need a replacement lens if MS cannot repair it.

Use scratch remover or replacement disks.
 
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