Here's the press release from Microsoft:

Microsoft Corp. today announced that it is taking a precautionary measure and voluntarily providing customers with a free retrofit to the Xbox 360 Wireless Racing Wheel.

The action is being taken after Microsoft was informed of a very small number of incidents of a malfunction in the Xbox 360 Wireless Racing Wheel, in which a component in the wheel chassis may overheat and release smoke when the AC/DC power supply is used to energize the wheel. There have been no reported incidences of fire, personal injury or property damage resulting from the component failure in the wheel.

Owners of the Xbox 360 Wireless Racing Wheel should stop using the AC/DC power supply until they have obtained their retrofit. They may continue to operate the wheel using battery power.

Owners of the Xbox 360 Wireless Racing Wheel should visit http://www.xbox.com/support or call Microsoft at (800) 4MY-XBOX (469-9269) to register for the free retrofit and protect against the potential hazard described above. Instructions, if necessary, will be provided with the retrofit. Microsoft is notifying and will be coordinating its response activities with the relevant regulatory agencies such as the U.S. Consumer Product Safety Commission. This may affect delivery dates.

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Smoking racing steer from Microsoft.