What NTL are saying is, that if you connect up the way I suggested, they say while you are on xbox live, you won't be able to or anyone else in youe house be able to use the internet.
I had it connected like that and was able to use xbox live and the internet at the same time, though NTL do not recommend it, as they say it can cause problems with the IP address assigned to the xbox live and the pc. Though this is true, it happened to me a couple of times where my xbox couldn't connect to xbox live and came up an IP address of 00.00.00.00 and my pc wouldn't connect to the internet either. I called NTL helpdesk and they when that happens just disconnect the power to the modem, wait about 30 seconds, reconnect the power to the modem, wait for all the lights to stop flashing and then re attempt to connect to the internet and xbox live. I had to do this twice while I was with NTL.
The other method they suggested is using a router which will split the connection.
They recomend this as the they do not like poeple networking.
Another option you have is to buy an ethernet card from PCWORLD, they start from £4.99. To install it all you need to do is take the side cover of the pc, plug in the ethernet card and put the cover back on the pc. When you turn the pc back on it will find the hardware and install it. You will then need to set it to internet connection sharing, to do this open up the network connections folder, right click on the icon of the ethernet card and select internet connection sharing, follow the instructions that follow. This method you can use xbox live and surf the internet at the same time but to use xbox live you do need to have the pc on and connected to the internet.
You can have the xbox anywhere you want you just need to get an ethernet cable (it has to be a cross over cable) the length that you require.
I hope this helps.