Here is a summary of my Xbox Live connections since it stopped working:
In August I could connect to Xbox Live fine using wired ICS through my computer. I remember downloading an update and XboxLive still worked fine.
Then I didnt play Xbox for a couple weeks and all of a sudden in the middle of September I could not connect to Xbox Live. I kept getting the MTU error where I would go to Network Settings and hit "Test XboxLive Connection". It would connect to Network, connect to Internet, then go one third of the way to connecting to XboxLive and tell me I had the MTU error. Due to my network circumstances, I just stopped playing XboxLive because I had no other option for connecting and none of the solutions I found were possible.
Then, today, just for the hell of it (and also because I just ordered Fifa12) I tried to connect to XboxLive, again through wired ICS. I was excited because instead of telling me I did not have proper bandwidth (MTU error), it prompted me for an update saying I would be signed out of XboxLive if I did not complete the update. I tried updating and the download bar did not move and after a few minutes I was given the status code 351f 0000 0080 0300 8007 2741.
Naturally, I hit the forums... I have seen many ideas tossed around, but I also recognize that many of these do not necessarily pertain to my EXACT status code. Thus, I have not tried any of these solutions. I have also not tried any of these solutions because I should not have to use a USB drive or a CD to update the Xbox. My Xbox worked fine and connected to XBoxLive fine using this exact same network configuration in August. It should be no different now.
If someone could please help, that would be great. However, do not respond if you haven't read through everything Ive written or if you have found a 'solution' to a different status code. It WILL NOT help. While I dont know the solution, I do know that there are different status codes for a reason.