This
issue occurs if your router or the gateway is incompatible with Xbox
Live, or if your router or the gateway has an incorrect MTU setting.
Note: Xbox Live requires a minimum MTU setting of 1364. We recommend
that you try out the steps shown below.
Things to try:
1. Ensure that you have properly setup your connection to Live by using the Connectivity Wizard http://www.xbox.com/en-US/support/connecttolive/xbox360/connectionmethods/webconnectivitywizard.htm
2.
Visit the following Web site to determine whether you have the correct
firmware version that has been certified as compatible: http://www.xbox.com/en-US/live/connect/routerlanding.htm
3.
See the router or gateway instruction manual for information about how
to change the MTU setting to 1364, to do this, or to determine whether
your router supports this feature, see the router support documentation
or contact support for your router device.
4. If you share a connection with a router and a modem, try a direct connection without the router.
For additional information on this topic refer to the following KB article: http://support.microsoft.com/kb/908882/
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