Two things, if you're using a wireless modem, unplug it from console, re-set it and let it connect and sit for a minute. then plug it back into the console. if you have just a regular modem do the same thing. make sure the wire connecting you're box to the modem isn't too long(over 7feet is too long). it wont update if you're not connected to the internet.
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1.make sure if you want to sighn into xbox live you make an xbox live connection test and a media test.
2.make sure if you have a gamertag, it says XBOX Live under your profile name and select recover gamertag.
3. if 1 and 2 do not work try changing console settings and/or change gamertag.
The xbox live board is down,so if you pass all tests except the xbox live one,this is the problem.I rang them and they said over 50% of users are having this problem.Its because so many people went on it over Christmas and the system got overloaded.They said they're working on it and it should be up and running in a week or two. ~~PS~~ I rang on the 12-1-08 so it should be up by the 20th,its not your fault,the servers down.