Here is a relatively simple guide that will assist you in getting your Xbox connected to Xbox LIVE:
http://support.xbox.com/support/en/us/xbox360/xboxlive/getconnected/hcxl/getstarted.aspx
There are currently two options, Xbox LIVE Free and Xbox LIVE Gold. If you wish to play multiplayer games, you'll need a Gold account. Xbox 360 consoles come with a time-limited trial of Xbox LIVE Gold.
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