Xlive.dll file is a DLL file that come in the 'Games for Live' package installer. You are getting this error message because Xlive.dll file gets misplaced or corrupt. So you need to replace this DLL file at its accurate position.
Download this package from (http://go.microsoft.com/fwlink/?LinkId=128962)
Run the downloaded package and select 'Run as Administrator'
Install the application and reboot the system.
Open command prompt with admin privilege
Type the following command, and then press ENTER:
This command scans all the protected system files and replaces damaged files with correct Microsoft files.