I was just on the phone with Microsoft, explaining how I couldn't sign into my banned account offline. I told them what the error message said. I asked is it possible to recover a banned XBL perma-banned account, she said no, and that it would give an error message if I tried. But, I decided to test something myself. While she was signed into my account's billing info, I put in my info and started recovering my banned account. It was downloading the entire time we were on the phone, and finished right before I hung up. So there is your tutorial on how to recover a banned XBL account.

Here is a more simple way of putting it:

Tell them that you are trying to play a perm banned account offline.
Tell them that the error is: invalid membership information.
Tell them that you are completely disconnected from LIVE.
Before recovering make sure that they say that they are logged into your account.
Start recovering account while stalling him/her.
PROFIT.

If you are gonna copy and paste this somewhere else, give credit where credit is due. That is all I ask.

This is great if you wanna transfer your licenses to your new console and re-download them!