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You need either a blue Ethernet cable to connect the Xbox to an internet outlet or a wireless router. If you use the wireless router, hook it up to your computer so it broadcasts a signal, then, depending on what Xbox you have, if its the new 360 slim you won't need a wireless adapter, you search for the signal, then connect it. If you don't have the 360 slim, then you need to buy a wireless adapter and it plugs into the back of the Xbox.
This is a common problem with some xbox 360 users and relates to internet connection, It can be down to ports or firewalls blocking connections or just that the update server is really busy and refusing connections however there is a solution. If you go to http://support.xbox.com/en-us/pages/xbox-360/how-to/update-xbox-360/system-updates.aspx
You can download the update and burn it to a cd or put it on a usb drive/pen and then plug it into your xbox and apply the update.
1.Simply connect your xbox 360 to the internet with the Ethernet cable. Go from the xbox 360 to a router or directly to your internet source; internet modem or internet cable if you have fiber optic internet connection. 2. Turn on your xbox 360 and go to the xbox live tab. 3. Go wher it says Join and follow instructions. You can put your credit card info. or buy a prepaid xbox live card
The internet stick you have would be a USB device which is not supported by Xbox 360, you can connect to Xbox 360 wirelessly or through a wired connection
One way of connecting wireless internet is through the ethernet cable to a laptop paired with your wireless router, or you would have to buy a Wi-Fi adapter for Xbox 360 which retails around $90.
Since Xbox 360 does not have a software like a PC, it is unable to recognize the USB internet stick you have as a internet connection, it may probably end up showing it up just as a USB device on the system settings menu on the Xbox 360 dashboard
if you dont have a router, you can either have the xbox or the pc conneted to the internet, not both. you have to have an eithernet cord or a usb 2.0 high speed usb chord that goes directly from the xbox to the modem. you cannot go from the modem to the computer then to the xbox.