I have been trying to use my leftover Linksys BEFSX41 (which I converted into a 4 port ethernet switch) to connect my Xbox360 using the "Wired" connection option and have had signficant issues trying to connect into Xbox Live.
So I replaced it with my Level One WBR-3406TX (which I also converted into 4 port switch). Now things work GREAT and I have no stupid MTU issues or any other BS. Linksys must have done something non-standard with the protocols to cause so much grief causing people to need to change MTUs. This leads me to believe that if any of you out there are trying to do the same thing and you have (or can buy for cheap) a different brand of wired/wireless appliance/router that you want to re-purpose you may fare better. Don't buy or use a CISCO Linksys Router if you're trying this.
NOTE: converting a router/firewall appliance that has usually 4 hardwired ethernet ports on the back into an ether switch means shut off DHCP services and plug _nothing_ into the WAN port.