Last week, a video posted on YouTube seemed to show a problem with Skyrim on the Xbox 360. It appears that when the game is installed to the hard drive some users have reported that the high resolution textures were not loading.
Bethesda has now acknowledged that there is a problem and posted the following message on the official Skyrim forums:
Skyrim uses a lot of dynamic streaming systems, including textures. We’ve seen a few reports of certain textures temporarily scaling down on the Xbox 360, and not scaling back up. We have verified that this issue does not occur when playing off the disk and when the game is fully cached (not installed).
Skyrim makes heavy use of the Xbox 360 caching system, and caches over the normal course of play while in menus or interiors. This cache can be wiped when other games are played or when the user manually removes it. We’re working on a solution in the next title update for those who have installed the game.
The simple fix is to not install the game until after the update.
Source: Skyrim Forums