Hi, Did you manage to get this working, got this for my son and getting same update message, went into game shop told me I needed xbox live for updates for expansion packs, which we haven't got............ told me to connect xbox to router via an Ethernet cable to join xbox live, which didn't work, driving me mad,,,,, old xbox how can we get it to work.... Very mad mum xx
Very sorry for the delay in getting back to you... been on holiday and have largely been offline. I did get it working, but it was a bit annoying - did you get it working yet?
You do need an Xbox Live account, and for that you need a Microsoft account - both are free, and you do
not need to pay for Xobox Live Gold or anything like that. Obviously, that does mean you need to connect the Xbox to the internet, and by far the easiest/cheapest way to do that is to use an ethernet cable and plug the Xbox straight into your router.
The biggest problem for me was hard drive space. If you have an Xbox 360 Arcade (like us), then you will need an external hard drive of some description, because the updates are huge and will not fit on the Xbox 360's own memory unit. In fact, we couldn't even play the game at all (even without the updates) without some kind of external hard drive since the basic install is something like 540 MB, which is larger than the memory unit on the Xbox 360 Arcade.
The cheapest option is to buy a 4GB USB memory stick and install everything to that - a 2GB stick will not be big enough for the updates you need if you intend to buy any expansions (which of course is the whole point of the game...) A flash drive or external hard drive can plug into the USB port next to where the Lego Dimensions portal plugs in, but there is also a USB port on the back of the Xbox.
We only had a 2GB flash drive which was big enough to allow us to play the game, but not big enough to allow us to install any updates - meaning that the expansion pack my nephew's Dad had bought him couldn't be played until I brought through my Xbox 360 hard drive and put it on my sister's Xbox.The irritating thing is that even with a hard drive, you need to be playing the game while logged into Xbox live in order for the updates to install. Firstly, the game itself will update with a huge 1.2 GB download (which takes over an hour, by the way). Secondly, when you go to try a new level (say for an expansion pack you may have bought), it will then queue up several more downloads which total about another 1.2 GB (another >1 hr wait, and more hard drive space required).
I was annoyed because while the box makes it clear that you need an internet connection, it doesn't explicitly say that you need at least 3GB of hard drive space (which the Xbox 360 Arcade doesn't have) and an active Xbox Live account (which offline users often don't have)
and a Microsoft account.
Good luck and I hope you get it working - it is a great game and my nephew and I have enjoyed playing it so far.