I don't think it could be a bad disc. If the game loads then your disc is good. You can't really have 'settings' on halo xbox. You just sort of put the game in and play. I suggest not using any other internet applications on your computer or any computers plugged into the same router. If you must have things open keep it minimalized.
Also, when the game starts don't rush the pre-game counter. Just press A once and let it count down from 30 seconds to game start. I don't notice a difference from that but kids say it decreases lag.

GoOd LuCk.

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