I am currently using Win XP SP3, 32-bit. The ONLY reason I had for installing Games for Windows Live was this:

It came with a freebie called "Red Faction Guerilla" which uses Games for Windows Live for on-line play. [The Steam version is also available

] Not that I like any of them but they work OK for me.
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I had my fair share of problems trying to make GFWL work (Steam was problem free). This was how I did it on my system:
a. Open up the required ports as dictated by Microsoft. I am currently using McAfee Firewall:

b. Install Microsoft .NET Framework 3.5 SP1 + hot fixes.
c. Download the GFWL client and install it.

d. Apply GFWL hot fix:

e. Reboot Win XP and then activate GFWL.
f. Create a :evil: TOTALLY :evil: brand new account for your country from :mrgreen: Microsoft :mrgreen: even if you had an existing one. After this, log in. However, you will receive the famous "80154002" code. Fret not!
g. Click the error code which will then take you to the Live Xbox page. Create an account using the user ID you have used for the GFWL account. Of course, use a different password this time. After this, set the country code again. This is to be the same as that for GFWL + Live XBox account.

h. Activate GFWL.
i. Activate the game.
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It looks like this after I start up the game