Well, the pawn shop said the reason they were selling them that cheap is that the company isn't getting enough of them to make it worth it so they're getting out of them all together (like I said, it's a chain, so they have a pretty large inventory). Had a friend that bought his there a month ago for about the same price and hasn't had any problems out of it.
Also, if I create a new XBL id and pay for a gold membership, shouldn't that cancel out any bans the previous owner had (if they had any at all)?