So I'm a bit of a newb to the X-box 360. Third game I've played on it in 10 years (and the other games were on the older versions).

I was experiencing horrible graphics in Skyrim and was horribly upset. As PC gamer I thought it was simply the x-box looking bad. Then reading the forums here I heard someone mention and HDMI cable. I didn't even know that it made a difference. If you're having graphics trouble I would recommend the $3 investment in an HDMI cable (if you haven't already). The component cables you get with the x-box (even the slim model) can only do 1080i instead of 1080p. I wasn't getting HD quality with my component cables and I'm pretty sure my console was set correctly, so give it a whack.

Has nothing to do with your rig or cables, its a known bug that causes textures to downgrade

I was experiencing poor textures and graphics due to my cables. This is not opinion, it actually happened to me. Some people may be in a similar boat as me and can fix the problems themselves as I did.

If your game isn't taking up your entire screen I'd at least look into an HDMI cable