Among the many tweaks and upgrades (and one downgrade) packed into the Xbox 360 dashboard update was one feature people aren't very happy about: Interactive TV ads.
Fortunately the clever gamers over on Reddit have come up with a solution for removing them. Redditer absurdlyobfuscated says there are many ways to do this, but he decided to use OpenDNS because it's the easiest solution. Straight from Reddit's intertubes:
1. Sign up for an OpenDNS account (it's free).
2. Add a network for your current IP address.
3. Go to Advanced Settings and next to 'Domain Typos', check the box 'Enable typo correction' if it's not already checked and apply.
4. Got to Web Content Filtering settings and set the filtering level to 'None', and under 'Manage individual domains', put rad.msn.com and select 'Always block' and then click 'Add domain'. Screenshot.
5. On your Xbox, go to System Settings -> Network Settings -> (your connection) -> Configure Network -> DNS settings -> Manual, and enter the OpenDNS IP addresses for the primary and secondary DNS servers: 184.108.40.206 and 220.127.116.11.
6. You may need to clear your hard drive cache before ads disappear entirely: System Settings -> Storage -> Hard Drive -> press Y -> Clear System Cache (note that you'll have to re-download any title updates for any games you play after doing this).
absurdlyobfuscated also suggests reconfiguring your router to use OpenDNS' DNS servers via a static DNS setting. That way you don't have to block each Xbox 360 in the house individually. Also, if your IP address changes, you will need to update your OpenDNS network to match.
Another solution for some routers is to just block the ad-serving domain. You can test to see if it worked by trying to load https://rad.msn.com/.
How to block Xbox dashboard ads [Reddit]