Got to pay for my "free" 1-monthly Xbox Live Gold membership

Also I should state that I don't pay for the yearly subscription for Xbox Live Gold, I pay for 3 month Gold. So technically I would be paying a pretty penny to pay for Xbox Live Gold and monthly membership for ESO yearly.

It's not possible to play any XBOX 360 games online without a Gold Membership. If you were playing before they had a "free gold weekend" on 6/1-6/3, and if you created a new XBOX Live account from your console you got 1 free month of XBOX Live Gold, after
that you'll need to pay for a subscription, there is no other way around that.

Hello DannyWC,

We see that you are not receiving Gold Status this month due to your subscription being a promotional Gold subscription for 1 month. Promotional subscriptions are not eligible for Rewards, so your free 1 month is not eligible. From our FAQ:

My Xbox Live Rewards account is not recognizing my Xbox Live Gold membership. What should I do?

Xbox Live Rewards can only recognize paid monthly or yearly standard, non-promotional Xbox Live Gold memberships. If you have a different type of membership, we may not be able to recognize you as an Xbox Live Rewards Gold member.

1. A gold membership is required to play online multiplayer.

2. If you purchase a gold membership, you can pay monthly, every 3 months, or yearly.

You're posting from a free account. I don't think you'll be able to activate the free month of Gold at this point: it's an offer when you are creating the Xbox Live account, and if you decline it you don't get another offer for that account. (At least,
that's how it used to work.)

If you purchase a 1 Month for $1 offer, you get the full Gold membership including Games With Gold. You are signing up for the recurring monthly subscription and billing if you do that, so be sure to turn off automatic renewal if you do not want to
keep paying for a Gold subscription at the regular monthly rate.