I had the same error:
Unable to Connect to Xbox Live
The error returned was "NSRangeException : *** -[NSCFString substringWithRange:]: Range or index out of bounds"
Solved it this way: When you sign in to XBL with Safari, be sure to select "Save my e-mail address and password." This is essential, but is not the default on the sign-in page.
[Version 3.0.4]
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Xbox Live Friends
Unable to Connect to Xbox Live
The error returned was "NSRangeException : *** -[NSCFString substringWithRange:]: Range or index out of bounds"
Solved it this way: When you sign in to XBL with Safari, be sure to select "Save my e-mail address and password." This is essential, but is not the default on the sign-in page.