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Local area connection with xbox problems

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Hello all,

I'm having problems with my local area connection. I am connected to the internet through a wireless router with a wireless network card. I have the local area connection on my computer enabled and I am still able to connect to the internet. However when I turn on my Xbox 360 and my Xbox connects with the local area connection I lose my connection to the internet. My setup is as follows:

I have my computer connected with the internet through a wireless router and network card.
I have an ethernet cable (the one that came with my xbox) plugged in to the ethernet port on my computer and the other end of the cord is plugged in to the ethernet port on my Xbox.

Now my computer reconizes my Xbox and vice versa. But like I just said whenever I turn on my Xbox and my Xbox connects to my computer I lose my connection on my computer.

I would apprecate any help anyone can give me with this problem. Many thanks in advance. :D
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Is there a reason that you aren't just plugging the Xbox directly into the router?
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