Audio
A number of problems might occur with the audio, such as the sensor not being able to hear you talk, picking up too much noise from the room or not detecting a microphone. If you see an error message that indicates a problem with the audio settings, try clicking on "More info" to read details about the problem. You might need to use the audio tuner to calibrate your voice to your surroundings, which you can do by pressing the "X" guide button and selecting "Audio Tuner."
Storage Space
According to Microsoft, the Kinect requires 190MB of free space to function. If you don't have this much space on your Xbox 360 hard drive, you will need to delete some existing items to make room. You can do this by going to "My Xbox" then "System Settings," selecting "Memory" and then choosing items to delete. These might include demo games and rentals. Once you have enough space, you can try to update the console software again.
Setup
If the Kinect sensor isn't positioned properly or there isn't enough light, it might have problems detecting your movements and sounds. This could affect the quality of your game playing and Kinect could start displaying error messages. Ensure the sensor is connected to your TV and console properly and that it is displaying a green light. You will need to position the sensor squarely in front of you and your TV screen, not to one side. You are less likely to have problems with the sensor if you can eliminate as much background noise as possible.
Sensor
If you sensor is displaying a red light or won't turn on, this could indicate a problem with the power supply or temperature in the room. You will need to wait for the sensor to warm up to room temperature -- approximately 70 degrees Fahrenheit -- unplug the hardware and then plug it in again. It might also help to ensure your Xbox 360 console software is up to date and check the USB connector and cables are all securely plugged into the correct ports.