In order to connect the PC to the router by USB, he will need to install the software provided with the router. The fact that XP is a 'pirated' copy should not in itself cause a problem with networking.
<<< He wants to connect...
...the Xbox to the router using a crossover cable >>>
A "crossover" cable is used to connect two computers directly - "Network Adapter to Network Adapter". It is not normally used to connect to a router, which uses a "straight-wired" ethernet cable.