And the reason for this part to fail differs along with the difference of the type of connection you are using to connect your Xbox 360 console as follows:
a. Direct connection to modem:
1. Make sure first no other devices connected to the modem at the same time as some modems has an Ethernet port along with a USB port so, you might think you can use both at the same time & connect the PC through USB with the console through Ethernet & that's incorrect so, we need to disconnect the PC first.
2. Turn the modem off then turn it back on after couple of seconds (by turning the modem off I mean to unplug it from the wall outlet even if you have a power button for it), then go on the Dashboard of your Xbox 360 console to “System” area then “Network Settings” then "Restore to Factory Defaults" and when it ask you to Apply Settings select "Test Xbox Live".
3. If it's still not working we need to get the Physical Address of your PC to put it on the dashboard of your Xbox 360 console as some cable companies are preventing any unknown MAC Addresses from connecting, to get the Physical Address of you PC connect the PC only to the modem then follow these steps here, the physical address will look like this 00-E0-98-C1-88-C2.
4. Go on the dashboard of your Xbox 360 console to “System” area then “Network Settings” then “Edit Settings” then “Additional Settings” tab then select “Advanced settings” & put the Physical Address of your PC without the dashes on the “Alternate MAC Address” part and select "Done", when it asks you to Apply Settings choose “Test Xbox Live”.
b. Wired connection to router:
1. Go on the Dashboard of your Xbox 360 console to “System” area then “Network Settings” then “Restore To Factory Defaults", when it ask you to apply settings select "Test Xbox Live".
2. Turn the router off then turn it back on after couple of seconds, then go on the Dashboard of your Xbox 360 console to “System” area then “Network Settings” then "Test Xbox Live Connection".
c. Wireless connection to router:
1. Go on the Dashboard of your Xbox 360 console to “System” area then “Network Settings” then “Restore To Factory Defaults", when it ask you to apply settings select "Test Xbox Live"
2. Go on the Dashboard of your Xbox 360 console to the "system" area then "Network Settings" then "Edit Settings" then select your wireless settings part down there "Wireless Mode, Network Name,..." the console will automatically then search for your wireless network and when it find it and you select it, it will ask you to enter your wireless key which is called WEP or WPA key - you can find it written on your wireless router or then you need to contact your ISP (Internet Service Provider) to get it from them - when it ask you to apply settings select "Test Xbox Live". 3. Just a kind of higher security that some router may use than the WEP & WPA key, you have also to accept the Xbox 360 connection to your wireless network on the router settings, you have to access to your router settings as mentioned before to check on the wireless security part whether your router apply a MAC filtering option, which is an option that blocks any unknown MAC address (the ID of any device) from accessing to your wireless network, and if it applies that kind of security you’ll find your Xbox 360 MAC address on the list there so, allow the Xbox 360 to get connected to the network, or even you can just turn off the MAC access control option instead of that, then go on the Dashboard of your Xbox 360 console to “System” area then “Network Settings” then "Test Xbox Live Connection".
4. If it's still not working, you can put the Xbox 360 console - as a trial - in a closer position to the router to see wither it's going to pick up an IP address or not.
5. If even after you turn off the MAC filtering option on your router settings your Xbox 360 can't still get connected to Xbox Live you need then to update your router firmware (The router software) and if you don't know how to do so then call your ISP (Internet Service Provider) to assist you with that, then go on the Dashboard of your Xbox 360 console to “System” area then “Network Settings” then "Test Xbox Live Connection".
d. ICS (Internet Connection Sharing):
1. Go on the Dashboard of your Xbox 360 console to “System” area then “Network Settings” then “Restore to Factory Default" when it asks you to Apply Settings choose “Test Xbox Live”.
2. Allow the ICS option on the PC as mentioned before, then test Xbox Live.
3. If it's still not working, set the IP Settings manually to be:
IP Address: 192.168.0.2
Subnet Mask: 255.255.255.0
Gateway: 192.168.0.1
Then go on the Dashboard of your Xbox 360 console to “System” area then “Network Settings” then "Test Xbox Live Connection".
4. If it's still not working, you can get the IP address of your connection from the PC as mentioned before then set your IP manually on the Dashboard of your Xbox 360 console using this IP address, when it asks you to Apply Settings choose “Test Xbox Live”.
If you faced any other kind of troubles with this part failing even after you tried these steps please don't hesitate to leave a comment.