Two separate sources (not to mention comments in Major Nelson's blog) are throwing their hands up in frustration. Ben Kuchera of ars technica (cited here) and Jay of the FNG-Spot blog (cited by Ben) both found that their premium - paid-for - Xbox Live content (e.g., Live Arcade games) redownloaded into the Xbox 360 Elite are locked without online authentication. Meaning you have to be connected to Xbox Live as the profile that bought them to actually play these content.

No offline Arcade. That's the killer.

The warning about that had indeed been given by Microsoft before: Jay mentions a Major Nelson post; we have Kotaku's announcement. What makes this story more uncomfortable - besides the entire DRM-locking of the content - is that Customer Service, whom Ben called, proved of little help.

That call advised the ars writer "that the only way to get the games working is to get my free data migration cable." This is where Ben cites Jay citing the Major and his commenters: data migration doesn't help: you still have to be logged on to Xbox Live as the purchasing profile. Somehow Customer Service didn't get the memo.

Implication: request for DRM license-transferring and reauthentication solution from Microsoft. Probability...