This error occurs if your console has been tampered with or modified. Your console can no longer connect to Xbox LIVE, install software updates, or play new games that require a console software update.
Physically disconnect your network cable or remove your Xbox 360 Wireless Network Adapter from the console.
You can use the following steps to turn off the automatic sign-in so that you can play games offline. To turn off auto sign-in:
Restart your console.
Select No if you are prompted to update your console software.
Press the Guide button on your controller.
Go to Settings, and then select Profile.
Select Sign-in Preferences.
Set Profile Auto Sign-in to Off.
Press the B button on your controller to return to the Xbox Dashboard.
Your console can now play your existing games offline. Any future attempts to sign into Xbox LIVE or update your console software will result in an error.
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