POSTING THIS INFO FOR ALL PEOPLE HAVING THIS ISSUE.
Trying to sign up for the $2 for Two months XBox Live. This error code kept occurring.
I've spent an hour on the phone with Microsoft. Found out that the Paypal system has problems & they have no date for when it will be fixed. It appears that they didn't sort out the payment terms with Paypal before they put it into the system.
The system will not accept Paypal accounts until this is resolved.
The only way is redeemed card or provide your credit card details, which I refuse to give them!!
Another very poor effort by Microsoft & typically poor response.
Had my XBox for many years & always had problems using XBox Live due to problems with their system.
I'VE HAD ENOUGH & NOW COMPLAINING TO CONSUMER AFFAIRS!!