Every time Xbox 360 starts it wants to update and fails/stalls during the update giving me an error it can not connect with Xboxlive although it says it has connected to Xbox live after boot up. My gamer tag/avatar is gone and all my saved games.

You need to fix the connection so you are connected to the internet, in order to download and install the updates, until then it will only allow u to be offline without the updates.

Xbox.com has a handy search page to lookup error codes:
http://support.xbox.com/en-US/error-code-lookup

From that page, those is the answer and resolution they give, good luck:
" Error C000-000E occurs when you try to download an update to your Xbox 360 console
Problem
You see the following error when you try to download an update to your Xbox 360 console:
error code xxxx-xxxx-xxxx-xxxx-C000-000E
Update failed.
Note In this error code, the "x" digits vary.
This error message means your console could not download a software update from Xbox Live.
Solutions
To resolve this problem, try the following solutions:
Solution 1: Try installing the update again.
Solution 2: If you're having problems connecting or staying connected to Xbox Live, see Troubleshoot your Xbox Live connection.
Note You can also update your console software by copying the update to a USB flash drive or a disc and then applying it to the console. "

Hi Jennie

First make sure that your xbox has the most up to date live update, you can do this on your computer by going to http://support.xbox.com/en-US/xbox-360/system-updates/system-updates-info and downloading it and then putting it on a usb disk and plugging it in to your xbox, 9 time out of 10 this will solve connecting to xbox live problems

if you have a usb modem and a laptop it is real easy. I hav been playing xboxlive in nigeria since i move here, but it is not as much fun. your ping or latency is goin to be really high because of the facts that there is no xboxlive in nigeria and nigerian internet aint that good. you will hav to join British or American xboxlive. its sumtimes fustratating. ill give the steps in any case
1) connect xbox 360 to laptop with ethernet cable
2) change ur ip of xbox to 192.168.0.2, and ur pc ip to 192.168.0.1
3) do not do anything to DNS
4) Go to network and sharing center >> manage network connections >> right click on dail up icon >> properties >> click on sharing tabs, and check all blocks. click apply ok and what not
5) try to connect to xbox live, it wont work right away, so try and try
6) if u hav any problems, search it on google
NOTE: Thins is for Windows Vista and Windows 7

1) Get a new router.
2) Get Gold if not done already.
3) GET EVERY UPDATE!
4) Try getting a new...anything you think is wrong.

u should try ringing ur internet server and u dont connect it to ur laptop u connect it to ur modem and router and btw for some reason xbox live doesnt work for everyone it weird but no one knows why

you have to get internet back. And let it finish updating. No way to reverse it.

you have to buy it and then upgrade it

This problem indicates that there is a error with your account. I suggest going to http://www.xbox.com/ and seeing if you can log in there. From there you should be able to access accounts and billings. Make sure your account is up to date. If it is not then do so and test xboxlive connection once more.
This should help please post if it does not.

Xbox Live is having problems guys they are working on it and hope to have it fixed sometime this week the problem you guys are having is due to the xbox live being down. Although it isnt completely down they are having gameing issues as well as download issues and voicemail issues. If you want to find out more you can go to www.xboxlive.com and seach status to see if they have resolved the issue yet.