What does the button next to the memory unit 2 on the front of the XBOX360 do?

That's use for connecting wireless controllers. When you set up a controller, you have to make it identify with that console and vice-versa. This is a safeguard to keep controllers from interfering with other 360 units in the area. If you go to your friends house, you'll need to associate your controller to their console when you get there and then re-associate it when you get home to your console.

Yeah, what ^^ said. It's way cool!

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