Actually, I couldn't remember if you could send the book to the battle tower. Most quest items you can not (or destroy them), but thought the Demon Wars might be different since you can read it yourself.
If you are playing the game off the DVD, try installing it to the hard drive (if available) and see if that helps with the scene when reading the book. That has helped with a couple cutscene problems (I installed it right away just to cut down on the optical drive noise).
Maybe try it after a cold start of the console. Heat may not be an issue (especially with a consistent problem), but I'm not sure what else you could do differently with the Xbox version. I only had a couple instances with my game freezing, after the Xbox had been on all day.
