to the forum.
The easiest way to connect both an XBox and a PC (or any other devices) to the modem is to buy a router. This router MUST be Cable or Ethernet compatible (ADSL routers won't work).
If you don't do that, the only way currently available is to connect the PC and Xbox up as you have, but only use one at a time, and reboot (switch off/on at the mains) the modem each time you switch.
However, I think the fact that your Rdy light is flashing might indicate a problem on the connection, so it might be worth calling Faults to get them to test it.