You will need two wall Plugged powerline adaptors (network extenders), which basically plug in the power outlet and provide you with a normal 10/100Mbps Ethernet port. Through the electrical wiring, these network extender adaptors create a data network over the power wires. See pictures below: (pictures taken from Microsoft)

Room with Internet Router

In the room with your internet router, connect one end of the ethernet network cable (red wire) to the wall-pluged network extender (left picture) and the other end to your router (right picture).

Room with your XBOX

In the room where your Xbox is located, use another network ethernet cable to connect your second PowerPlug Network extender to the network port of your Xbox 360. The wall plugged network extender will use the power lines of your house to communicate with the network extender located in the room with the Internet Router, thus providing internet connectivity to your xbox.

An excellent product to use for extending your network connectivity using the electrical wiring is the NETGEAR XAVB101 Powerline AV Ethernet Adapter Kit. This kit includes two Powerline Network Adapters offering 200Mbps data rate and 128-bit encryption for security. This model earned an “EDITOR CHOICE” award from PC Magazine and it is really plug-and-play and stable.

• HomePlug 1.0 — Older Specification for connecting devices via power lines in the home. Theoretical speed of 14 Mbit/s.
• HomePlug AV — Current Specification which allows for speeds up to 200 Mbps half-duplex. This HomePlug version can be suitable for transmitting High Definition TV (HDTV) and Voice over IP (VoIP) in the home network.

The big advantage of PowerLine networks is the ease of installation. Since you will always have a power outlet near a computer, you can connect your computers to one another through the power outlets and the electrical wiring. Another advantage is that you don’t need a network card to be installed in the computer, since the network adapter plugs directly to the power outlet, as shown on the diagrams below.

As shown on the diagrams, all you need to set up a PowerLine Network is a “Power to Ethernet” or a “Power to Wireless” adapter. Using these adapters, you can interconnect any Ethernet or WiFi equipped computer to your PowerLine Home Network. A normal Ethernet Gateway or Router can also be used to provide Internet connectivity.