someone told me that you could run a cat5 cable to your pc, then from your pc to your xbox for xbox live. only limitation is that the pc has to be on to play live. anyone know how this works?
If you want to do it that way, just put another network card into the computer, and run a crossover cable to the xbox, then bridge the network connections in Windows.
There is also a setup section in the XBOX dashboard program for you to set extra bits like DNS server, default gateway, netmask etc. You definatley need a crossover cable though. Don't try it with a normal one, it won't work.
Alternativley, you could just plug them both into the cable modem/router. Which would make it all a bit simpler.