Q: Why am i getting this error message? How can I fix it?
A:it is because you do not have some ports opened required for Xbox Live. Opening these ports will allow a full open connection to all the players you are playing with.
Video Version ( A little outdated. Make sure to look at the correct ports below and make sure they are the same. But the general method is the same. )
Text version
[size=20]1. Log in to your web based configuration page ( mostly 192.168.1.1 OR 192.168.0.1 )
The default username and pasword is “admin” and “admin” without the quotes.
If neither of these two work, I suggest using Nookie’s method.
if you need help finding this refer to PortForward.com - Port Forwarding Guides Listed by Manufacturer and Model
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Find the tab/place for Port fowarding
( mostly in the Advanced section ) -
Then add the ports ( taken directly from xbox live support page )
Port 88 (UDP)
Port 3074 (UDP and TCP)
Port 53 (UDP and TCP)
Port 80 (TCP)
( If your having problems with a kinect, also add this extra port )
Port 1836 ( UDP and TCP )
Then check all the boxes if necessary and click “Save”.
You now have succesfully opened the Ports and changed your nat type to Open 
If this did not solve the issue you can get greater help by visiting xbox’s Support page
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Can’t Connect to Xbox LIVE Solution - Xbox.com
Didn’t work? Here are 2 more things to try that have worked for other people.
For some lucky people, simply unplugging your router/modem for 30 seconds, and then plugging it back in may do the trick.
Another know factor of this is the quality of your router/modem. A higher quality modem/router may fix this if the above does not work. I recently switched to a better quality modem myself and have noticed my connection is open a lot more then it was before.
If you are running a setup from a router to a modem, etc, a direct connection to the Xbox might give it a more secure connection.
