Finally, Problem Solved.
PPL trying to burn Xbox games please read I think this might help.
Thanks for trying to help, but I am using Verbatim disks so it wasn't related to low quality disks.
However, last night I did manage to find a workaround and finally burn an XBOX 360 game. I'm not sure but I think this will work for many users who get the "failed to set datazone capacity" error.
What I did was this - I've read numerous xbox burning guides, all of them said to change the setting in imgburn-tools-settings:write options Layer Break to User Specified 1913760. All of the guides also said to choose the .DVD file for burning and not the .ISO file.
I opened the .DVD file and noticed that the only thing that it contains except for the iso file name is the Layer Break number of 1913760. So, I changed the setting in IMGBURN back to "Calculate Optimal". I then chose the .DVD file and told it to burn it, it gave me the same "failed to set...." error, I told it to continue, and voila - it continued without any problem and burned the game ( which works flawlessly).
I did it again with a different game and the same story - if the write setting is on "User Specified 1913760" I get the error (first time says "reason:write error" second time says "reason: Invalid Field in Parameter List"), if I change it to "Calculate Optimal" I get the error "failed to set......reason: Invalid Field in Parameter List", I click continue, and then it burns the disk, and the game works.
Hope this helps...enjoy
Idan