The problem has been resolved! After spending a little more than an hour with the highly trained Microsoft Technician (in a secure location), I was no better off than if I'd of asked my dog for tech support. The boy wonder told me that his location was classified for security purposes when I was trying to make small talk waiting for updates to d/l. I asked him if he thought I was gonna track him down. BTW- I think he was in India because he sounded just like Hadji from Jonny Quest (a cartoon I used to watch when I was a pre-teen. It originally aired 1964-65). Anyway, I was frustratedly looking through my dashboard trying to find a solution myself. Turns out there are 2 ways to set your online status. One way sets it by pressing the guide button/scroll to personal settings and there you can select your online status. We tried that, I tried that way before even considering wasting anytime with Bill's boys. The way I found (w/o Hadji) is press the guide button/select your gamerpic box/ press a/ scroll to profile, hit the a button. In there you can limit who see your status to block everyone, friend's only, or everyone. That was set to block everyone. I assume this happened during a power outage. The power flickered and it glitched. Anyway the 3 people on my friends list now can see when they want to set their online status to "appear offline" because they can see me online now!
