I just bought Xbox Live Gold for 12 months on mmoga so that I could play online. I then received the code promptly as usual and wanted to enter it. The code was not used yet and worked the first time it was entered. Then I was asked for PayPal, address etc. After I entered all the things and went on I suddenly came back to the code which is supposedly already in use. At first I thought that it must have worked because I could enter everything that is no longer possible, but nowhere does it say that I have Xbox live gold and unfortunately online gaming does not work either.
You should call support or you can chat with a support representative on the Xbox website.