Guide no longer showing friends online? Picture from xbox website to reference what its...

That's correct, as long as the website shows the setting as "Blocked" then regardless of what you set it to on the console (XBOX 360 Controller's guide button > Settings > Online Status).

those games have been removed from xbox store, I check on the website.. :/ all it shows are pictures

UPDATE 22/07/2016

Hey there Xbox and Mister Mascot! There was an update yesterday on this issue. However it is still not working as intended. After this update, the friends list does not show the friends that play on Xbox 360 neither "Offline" nor as playing "???". It shows
them as online, however, it still fails to show what they are playing. It just shows them online with no game playing. When they shut down their Xbox 360 it shows them as "Last seen X m/h ago: " without -again- referring to any game. So what needs to be worked
on now, is to display the game they are playing on their Xbox 360. Thanks for all the work you've been doing!

Here is a screenshot for reference. http://imgur.com/a/lXLx6

Do your friends appear offline in your friend list, or only in the game itself?

What NAT status do your friends have?

How do you and your friends connect online? Are you/they using a landline based connection (e.g. cable, DSL) or do you/they use mobile phone based internet (3G/4G/LTE/5G)?

Did you and your friends make sure they don't "appear offline" in their profile settings? Check by opening the guide, going all the way to the left to the Profile picture and check that you and your friends set their profile to be online instead of "show
offline".

Actually, I think what you're referring to is when the gamerpicture doesn't show up on the forum for some reason. It's kind of a default pictures that shows up.