I just got a 360 for xmas. It is an impressive machine, but I gotta say... I do IT/tech stuff for a living, and the problems I had getting signed up for live nearly had me returning the damn thing. First, it reported FAILURE on the MTU part of the network tests. Clicking on "Show details" brought up a fookin completely blank screen. Leafing through all of the stuff that came with it didn't mention a single thing about MTU.
OK, so Googling revealed that I needed the NIC on the PC to be set to a minimum of 1364, and it was at 1300 (2 nics, ICS, no router). Diagnosed and fixed that no problem. No thanks to xbox.com, or the 360 itself. Next, it got all the way down to the "Xbox Live" test, and guess what - FAILURE. Again, no reason given. I just ran the test again, and it passed.
Next came the process of actually signing up during this madness - retry after retry when seeing the "could not connect to the Xbox Live service". I'm telling you, if I weren't used to dealing with tech problems, I'd have smashed the thing against the wall. I'm still seeing the spinny progress indicator for several minutes at a time on most screens - happens every hour or so. This is DEFINITELY not a good time for XBL problems, when so many people are just firing up their xmas 360 for the first time - especially when the machine itself already has a bad reputation from so many problems in the past. 9x out of 10, people (especially n00bs) will interpret the Xbox Live problems as just "My Xbox doesn't work" - especially when the unit's error report is vague or missing completely.