Hardware
Before you start setting up wireless Internet for your Xbox or Xbox 360, make sure that you have a modem, working Internet services, a wireless router and a wireless adapter for your Xbox. The best wireless adapters are from Microsoft.
Router Information
Using your router's manual, figure out how to look up your SSID (the name of your network) and its encryption key. This process varies from router to router. If you haven't set up a router security encryption key, it is suggested you get a 128-bit WEP encryption, which will consist of 16 keys for your router password. An unsecured router can be accessed by anyone at any time, while an encrypted one requires a password. An encrypted router will prevent people from sharing your Internet and cutting down your bandwidth. People taking up your bandwidth causes lag, and can make it nearly impossible to play online.
Xbox Wireless Set Up
The Xbox 360 and the original Xbox connect to Wi-Fi using the same steps. Connect your adapter to the back of your Xbox or Xbox 360 using the Ethernet cable on the adapter. Start up your console. At the dashboard screen, go to "Settings," then "Network Settings," then "Advanced," then "Wireless," then "Settings." Select your SSID, and enter the requested information in the fields provided. For your channel, select infrastructure. Fill in your security type, and then the encryption key password for your router that you looked up earlier. If your router does not broadcast its SSID, select "Other" at the "Select Network" screen and enter the SSID of your router. Save your connection. You can check on your wireless Internet status at the "Wireless Status" screen. From the "Network Settings" screen, select "Connect." Your Xbox will connect to Xbox Live at this point.
Using wireless Internet helps to get rid of cords running throughout the building, but it can cause problems due to outside factors, such as the distance from router, walls or any other obstructions that may reduce the range of the router. These problems will include latency problems, lag and disconnecting. However, wireless Internet handles itself quite nicely, and these problems are fairly uncommon.