"I've done it. I think it is a 64bit problem.
To fix the LIVE popup problem, just copy the following files to "Windows\System32".
xlive.dll, xlive.dll (Security Catalogue), xlivefnt.dll, xliveinstall.dll, xliveinstallhost.exe.
The files are in: "Windows\SysWOW64.
Hope this helps.
Arkham City runs in 32bit mode so won't find the the .dll's in SysWOW64 folder.
"
YES!!!!!!!!!!!!!!!!! Thank you so much.
After many reinstalls of the game and GFWL, and a clean install of Win8 Pro, I was about to give up then found this and now I'm up and running again.