Q: Why am i getting this error message?
A:it is because you do not have some ports opened required for Xbox Live

Text version

1. Log in to your web based configuration page ( mostly OR )
The default username and pasword is "admin" and "admin" without the quotes.

if you need help finding this refer to http://portforward.com/

2. Find the tab/place for Port fowarding
( mostly in the Advanced section )

3. Then add the ports

Port 88 (UDP)
Port 3074 (UDP and TCP)
Port 53 (UDP and TCP)
Port 80 (TCP)

then check all the boxes if necessary and click "Save"

You now have succesfully opened the Ports and changed your nat type to Open

If this did not solve the issue you can get greater help by visiting xbox's Support page