Valve has fixed the the lag issues plaguing the 360 players during online multiplayer gameplay by upgrading their network infrastructure and adding a bunch of dedicated servers. Valve today announced via it’s official blog post:
We have upgraded our network infrastructure to better accommodate the huge response to L4D2. 360 players will now have lag-free servers. We’ve also added more dedicated servers.
Valve is still going to monitor the servers for any future hiccups, so you can expect those red bars to turn green and get ready to kill some lag free zombie arse with your mates.