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According to my knowledge, you can't use usb internet for xbl
You don't use a USB CABLE. You use an ethernet cable from the back of your computer and plug it in the back of your XBOX360 to have XBOX LIVE. :)
Yes.
You can download USB mods, but there are no ingame cheats.
And USB mods can potentially get you banned from PSN or Xbox LIVE
You could get a copy from the internet and put it on a USB stick and run it from there