Why does this happen?! Very strange stuff inside!

Because nobody replied in that one :(
I still don't understand how an xbox can cause so much interference
 
I had this problem too when I was with Virgin Media, when I used my 360 either wireless or wired by Ethernet it would slow the router down to a crawl (even on Ethernet). I moved to BE Broadband and get a BE Box for which it no longer occurs. I was also using a Belkin router at the time. Maybe some sort of incompatibility?
 
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