Yup, it's actually known as the RROD (Red Ring Of Death). You might want to see if you can fix it, I'm sure there are loads of YouTube tutorials on how to do it.
Xbox Ones are as cheap as chips nowadays because they're coming to the end of their genaration...but you might be better off waiting for the Xbox Scorpio to be released next year. It's going to be pretty powerful and it wouldn't surprise me if Microsoft have it launching with an Oculus Rift included, or at least an Oculus manufactured VR headset.
VR is the future of gaming so it's only a matter of time before Microsoft get on board with it, and the Xbox One isn't anywhere near powerful enough to give a decent performance with decent eye candy with a headset. Same goes for the PS4 tbh.
On the one hand it's great buying a console at the end of a generation because the hardware and games are as cheap as chips, but on the other you won't be able to buy that many new releases for it in the not-too-distant fututre.
It's up to you tbh, but personally I'd go for an Xbox Scorpio next year.