I believe it means your router or modem will not allow you to send the amount of information that is required by Xbox Live. I believe MTU stands for Maximum Transmission Unit. I failed that test when I was at a hotel trying to get on Live; you have to change your router settings to fix it I believe.
It means that your router cannot except some of the packets being sent from the xbox because they are over the size limit the router can handle. Increasing MTU (maximum transmission unit) in your router configuration screen can resolve the issue.
I have the MTU problem when I try to go on Live at work. If anyone knows of a work around, since I don't have access to the settings, that would be amazing!
Mine did that when I had both the Xbox and computer plugged into the gateway, I just shut everything off for a minute and when power came back on on everything, everything worked fine.
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