One unfortunate aspect of the holiday season is the increase of thefts reported, and unfortunately, this also includes Xbox 360's.
Most people have their Xbox 360's set to Auto Sign-In for their Xbox LIVE accounts as a matter of convenience, however if the console is ever stolen, this will allow the thief to immediately log in with your account, impersonate you via Xbox LIVE and Windows Live Messenger (if you have it set up), and also charge Xbox LIVE memberships and Microsoft Point purchases to your credit card (again, assuming you've used your credit card on your console before).
This can lead to some very serious issues, and I recommend disabling Auto Sign-In and setting up a Pass Code on your account to protect yourself from the "what-if" situation.
1) Go to the Xbox 360 Guide by pressing the Xbox 360 Guide button, and go to the "Settings" Blade
2) Select "Profile"
3) Select "Auto Sign-in"
4) Check "Disabled" for Xbox LIVE and Windows Live Messenger
5) Return to the Xbox 360 Guide and select "Account Management"
6) Select "Xbox LIVE Pass Code"
7) Enter a Pass Code of button presses based on the displayed buttons from the Xbox 360 Controller
Now, when you want to sign in:
1) Turn on your Xbox 360 console
2) Go to the Xbox 360 Guide
3) Press "X" and select your Profile
4) Enter your Pass Code
5) From the Xbox 360 Guide, select "Friends" from the Home Blade (it has your Xbox LIVE account name)
6) Press "Y" to sign in to Windows Live Messenger
7) Enter your Windows Live ID password and do _not_ save it to your console
Also, if your console is ever stolen, immediately contact both the police and Xbox Support (1-800-4MY-XBOX) with the serial number. The serial number can be found on the back of your console.
You'll also want to notify Xbox Support of your console ID. This ID is unique to every Xbox 360 console, like a serial number, but more importantly, it's logged and checked when someone connects to Xbox LIVE. This means that if the thief happens to log into Xbox LIVE, either through your account or one they've created themselves, Microsoft will know, and may be able to trace the whereabouts of the console.
You can also ask Xbox Support to ban this console ID, which would prevent that Xbox 360 from ever accessing Xbox LIVE again via any account. I'm not sure if they can un-ban a console though, so in case it's ever recovered, you may want to use this as a last resort.
To find your console's ID:
1) Go to System Settings via the Xbox 360 Guide or My Xbox Channel
2) Select "Console Settings"
3) Select "System Info"
4) Your console's ID is in the top left
Again, while these tips may be more inconvenient during the short term, taking more time to log in to your Xbox 360, if your console is ever stolen, you can at least be rest assured that your credit card won't be the subject of fraud and you won't need to repair any damaged relations with your friends on Xbox LIVE and Windows Live Messenger when someone impersonates you and acts like a jerk to them.
Safe and happy gaming!
Updated 05/10/09:
Removing Your Credit Card Info from Your Xbox 360
It used to be that once you entered your credit card information into Xbox LIVE, either on the original Xbox or Xbox 360, it was there forever. While rare, this could lead to some very unfortunate security issues if your Xbox/Xbox 360 was ever stolen.
Thankfully, you can now remove any credit card from your Xbox Account.
1) Log in to your Xbox account at the official site.
2) Click in the top right where it says "My Xbox" and select "Manage Profile"
3) Select "Manage Payment Options."
4) You'll now be looking at a list of all credit cards associated with your account, including the option to remove them.
Personally, I recommend you remove all credit cards, and rely on Xbox LIVE Membership cards and Microsoft Point cards purchased from retail, but of course, it's your call.
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