The next Xbox console is apparently in the manufacturing stages. According to an IGN source, assembly of the next-generation Xbox hardware started recently at the Austin, Texas branch of Flextronics. This is the same electronics company currently assembling Xbox 360 hardware, and is the manufacturer of the original Xbox.
Prior to reaching the manufacturing stage, Flextronics created a new testing group separate from the rest of the company. This team was solely dedicated to comprehensive marketing, software, and hardware tests of the next Xbox. With that activity concluded, Flextronics started building the hardware -- but that doesn’t necessarily mean we’ll see the Durango soon.
The most likely case here is that new manufactured hardware would be development kits, consoles created specifically so game designers know what they’re working with. Microsoft said flat-out it wasn't debuting a new console at E3, so rumors regarding new manufactured boxes probably wouldn’t stack up to a reveal.