I have an Xbox 360. I am going to be in an Extended Stay for quite a while and would like to get onto Xbox live. I have a crossover cable hooked into my laptop, which accesses the wireless internet in my room. I have set that up with internet connection sharing.
I do not have a live account as of yet. When I try to join via the dashboard in my xbox, it tells me an update is needed for my dashboard before I can connect, so I choose yes. Every time I do, it sits at about 5% complete for a few minutes, then says the update cannot be performed.
Since it knows I need an update, and since I fired up ethereal and saw that it got responses back from xetgs.xboxlive.com, I am fairly positive my xbox can see the internet.