How to Setup a VPN Connection on Your Xbox 360 Console
 
Info:
There are many benefits to routing your xbox IP through a VPN connection. This ranges from utilizing exclusive American content, to hiding your IP from DDoSers, or even hiding your location from Doxers. This tutorial will show you a loophole that allows you to get around/avoid these hassles. Let us begin.
 
Prerequisites:
WiFi Connection
Laptop with LAN port
VPN (Virtual Private Network)
Ethernet Cable
Free VPN's:
Hotspot Shield - http://hotspotshield.com/?lg=en
ProXPN - http://proxpn.com/
CyberGhost - http://cyberghostvpn.com/
This tutorial was done using ProXPN. When installing these, make sure it sets you up with an American IP so you have access to American Xbox Content.
 
Tutorial:
Download and Install one of the above free VPN's, or purchase a private VPN server.
Connect your PC to your Xbox 360 with the LAN cable.
On the Xbox, go to System Settings>Network then make sure that your IP and DNS settings are set to automatic. This is the Xbox default, so it should be preset if you haven't changed it.
Go to the "Network and Sharing Center" on your PC. This is found under the start menu, utilize the search bar to find it.
In the Network and Sharing Center, click on "Manage Network Connection" in the left sidebar.
Right Click on "Local Area Connection." Then navigate to "Internet Protocol 4."
 
Click on "Use the Following IP Address" if it isn't already set. Set IP to 192.168.0.1. Set subnet mask to 255.255.255.0. Leave the rest blank.
 
Next you must navigate to your VPN and select properties. If you are using one of the free VPN's I suggested, connect to the VPN, go to this icon on the bottom right of your screen . Select "Network and Sharing Center," then select "View Status" on the VPN connection. Click on Properties, then navigate to the sharing tab.
Select the "Allow Other Computers to Connect Through This Connection" option in the sharing tab. Also change the "Home Networking Connection" to "Local Area Connection." Should look like this:
 
Then UN-CHECK the "Establish Dial-Up Connection" and "Allow Other Network Users to Control" boxes.
Make sure that you are now connected to your wireless network, and your VPN.
Finally, "Test Network Connection" on your Xbox 360 and it should be all set.
Credit:
http://www.se7ensins.com/forums/threads/tut-setup-a-vpn-on-an-xbox-360-console.585549/