I've been using an old hacked xbox for a media centre for the last few years without any hassle, but recently the connection stopped working and I couldn't see why. A bit of digging and it turns out that it's because of me having installed Windows Live sign-in assistant. Uninstalling that allowed the connection to work again. Sorted.
I know this is hardly a major issue that lots of people will have, but it's certainly annoying if you're one of them...