Xbox 360: Error message when you sign up for Xbox Live: "The e-mail address you entered is already a part of the Windows Live ID network and does not need to be created" (912279)

SYMPTOMS

When you sign up for Xbox Live and enter an e-mail address, you receive the following error message:

The e-mail address you entered is already a part of the Windows Live ID network and does not need to be created. Do you want to use this e-mail address with your Xbox Live account?

CAUSE

This issue occurs when one of the following conditions is true:

You try to create a new Windows Live ID account (the e-mail address and password that you use to sign in to the Windows Live ID) for an account that already exists.

Note Typically, this includes Hotmail accounts and MSN accounts because both of these types of accounts are part of the Windows Live ID network.
You are using an e-mail address that does not qualify as a Windows Live ID account.

Note Some e-mail address domains are not permitted to become a Windows Live ID account. An e-mail address domain is the word that appears after the @ symbol in an e-mail address.

THINGS TO TRY

If you receive this error message, select Yes, and then type your Windows Live ID credentials to continue.

Note If the address that you entered is your e-mail address, it may already be a Windows Live ID account. If you do not know whether your e-mail address is a Windows Live ID account, use a different e-mail address. To do this, select No when you receive the error message that is mentioned in the "Symptoms" section, and then try a different e-mail address.

MORE INFORMATION

Make sure that the e-mail address that you enter is a current, valid e-mail address. If you do not have an e-mail address other than the e-mail address that creates an error message, visit the hotmail.com Web site, and then create a new e-mail account. Later, when you sign up for an account or migrate your account, select Yes, I have one when you are prompted if you already have a Windows Live ID account.