I received the Xbox about a week ago and it had the 3rl error. I fixed that for a couple days with the penny fix and overheating it (on purpose) but then the 3rl error was back.

I took out a couple of the 8 black screws on the inside of the box, and now it boots up fine, but after a couple of minutes the fan goes really fast for a couple of seconds and two red lights pop up. Doesn't this signify overheating?

I let the box cool for three hours and then I got 10 - 15 minutes of gameplay before it "overheated" again.

should I let it cool overnight? thanks in advance for any help.

Yes it's overheating, the heatsink are not making proper contact with the CPU/GPU chips. Re-apply new thermal paste and remove washers so that contact is made with the chips/heatsinks.