4. Logged off lionhead.com and saved the game that I was playing.
5. I did not play the game for 3 days, when I started it the next time I played, my dog barked in the chamber of fate and I was able to open the chest.
If you are not able to open the chest after 3 days, try to contact lionhead studios or xbox.com support. That may have been the difference this time I tried. I had sent an email to lionhead regarding the issue and they said to talk to xbox.com support.
When I contacted xbox.com support, they said that they don't provide support for in-game play.