You will need a router. A router is a device that allows several devices to share an internet connection. The router hooks up to your modem (Cable or DSL, it doesn't matter) and then other devices (eg. your computer or Xbox) connect to the router and access the internet through it.
Home routers work by setting up a network inside your home for all of your devices to connect to. Depending on the router, it could be a wired-only network, a wireless-only network or, more commonly these days, a combined wired/wireless network.
Wired routers can support up to three speed grades: 10Mbps, 100Mbps or 1000Mbps (also called Gigabit Ethernet or Gig-E). Xbox 360 supports 10Mbps and 100Mbps, so the router you buy should support at least those two speed grades. Practically all of them do these days.
Wireless routers can support up to four wireless standards: 802.11a, 802.11b, 802.11g and 802.11n (draft). Those are colloquially known as Wi-Fi A, B, G and N. The Xbox 360 Wireless Adapter supports Wi-Fi A, B and G. The most common standards are Wi-Fi B (most compatible but only 10Mbps) and Wi-Fi G (highly compatible and 54Mbps.) The others are Wi-Fi A (not very compatible, 54Mbps) and Wi-Fi N (still quite new, 108Mbps). The router you buy should at a minimum support Wi-Fi B and G. If you've got money to spend, buy one that supports N as well, but make sure it is Wi-Fi certified if you do.
Because a wireless network doesn't require the devices to be physically connected, it's possible for anyone in range to connect to your wireless network, possibly without your consent or even knowledge. There are a number of ways to prevent this, but the most effective is using passworded encryption. There are three main standards to do this on a home network: WEP (Wireless Encryption Protocol), WPA (Wireless Protected Access) and WPA2. In order to use them, both your router and your device must support the encryption method you choose. The Xbox Wireless Adapter supports WEP and WPA, but not WPA2. All three methods work essentially the same way: you set a password on the router, and any device trying to connect to the router will need the password you set. However, the encryption schemes are different between them. WEP's encryption has been broken so it no-longer provides effective protection against a determined hacker. WPA can use one of two different encryption schemes: TKIP or AES. WPA with TKIP has been broken. WPA with AES has not. Xbox 360 supports both.
Bottom line: You should buy wireless/wired router that supports Wi-Fi B/G and 10/100Mbps at least. If you've got money to burn, buy a router that supports Wi-Fi B/G/N and 10/100/1000Mbps (Gigabit Ethernet.) Your Xbox (and PC) will connect to the router through the ethernet port or using the Wireless Adapter, your router will connect to the modem.
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