I don't know what your problem could be, if you are signed into Xbox live it's odd. I've had it tell me I need a active connection to play online once or twice, but it works when I try it again. I used to have a lot of trouble getting into a game of COD4 when my NAT settings were set to strict, once I changed my router and got my settings to moderate it was a hell of a lot better at joining games.
You could check see if you're set to strict, moderate or open.
I played COD4 online yesterday and 5 games in a row the host left as soon as the match started. I really don't know why people do that. And why can't Infinity ward patch it so someone else becomes host?. I spend half the time being booted back to the lobby when playing this game.
As far as I know you can stream high definition movies or trailers on 360 from a PC, don't know about any other source. You would need the software installed on a PC so your 360 can connect to it. I know Windows Media player 11 can do it pretty easily, Zune software and Tversity is another.
I've got 5ms and it's perfectly fine. Would go for 19" or above if you do get one, widescreen if you can. Hook the 360 up to it with a official VGA cable as the cheaper ones are not shielded so you get interference.
Picture quality is really great at 720p or higher.
Looks fine to me, I got a 19" widescreen lcd monitor the other day and it's plenty big for 360 games imo, as long as you're sitting close enough to it. Like that TV it's 5ms response time so you won't see any ghosting on screen. I'VE got the 360 hooked up to it with a official VGA cable and the picture quality is pretty damn amazing, perfect for my bedroom.
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