IF you are playing on the 360 with the Play & Charge kit connected then the battery will charge during use.
IF you plug in the Play & Charge kit BEFORE turning off the 360 via the Ring of Light, the battery WILL continue to charge.
IF you plug in the Play & Charge kit BEFORE turning off the 360 via the mains switch, the battery WILL NOT continue to charge.
IF you plug in the Play & Charge kit AFTER turning off the 360 via either the Ring of Light OR mains switch, the battery WILL NOT charge at all.