Is the Microsoft Create account Service down?

The Terms of Service say that you can't give away or share a Microsoft account. They will have to create their own account.

What happens if I set up my Xbox and Zune services with two different Microsoft accounts?

from
support.xbox.com/.../manage-microsoft-account

You will get the most out of Xbox LIVE and Zune Music + Video if you use the same Microsoft account to sign in to both services because you will be able to share your Microsoft Points, gamerscore, gaming achievements, Zune Music Pass and Xbox Music Pass,
play counts, badges, and friends. If you set up your Zune and Xbox services using different Microsoft accounts, be aware that:

•You can’t combine or merge two accounts into one.

•You can’t migrate plays, achievements, badges, or friends from one account to another.

If you did set up your Zune and Xbox services using different Microsoft accounts, the best thing to do is to determine which user profile (your gamertag or Zune tag) is more important to you or which you've got the most time and money invested in. Use the
Microsoft account associated with that profile (your “primary” Microsoft account) to create a new account in the other service.

•If you decide to use the Microsoft account associated with your Xbox gamertag and not your Zune account, create a new Zune account using your primary Microsoft account. To do this:

1.Start the Zune software.

2.Right-click Sign in or your Zune tag in the upper-right corner of the screen, and then click Switch user in the drop-down list.

3.Click Create a new acct then follow the steps to create a new Zune account using the primary Microsoft account that you chose to use for all services.

•If you decide to use the Microsoft account associated with your Zune account and not your Xbox account:

1.Go to Xbox.com and click Join now.

2.Select the type of account you’d like, and then sign in with the other Microsoft account.

•Note You can still access and use the Zune or Xbox account associated with your “secondary” Microsoft account. You just can’t integrate the two.

What happens if I set up my Xbox and Zune services with two different Microsoft accounts?

from
support.xbox.com/.../manage-microsoft-account

You will get the most out of Xbox LIVE and Zune Music + Video if you use the same Microsoft account to sign in to both services because you will be able to share your Microsoft Points, gamerscore, gaming achievements, Zune Music Pass and Xbox Music Pass,
play counts, badges, and friends. If you set up your Zune and Xbox services using different Microsoft accounts, be aware that:

•You can’t combine or merge two accounts into one.

•You can’t migrate plays, achievements, badges, or friends from one account to another.

If you did set up your Zune and Xbox services using different Microsoft accounts, the best thing to do is to determine which user profile (your gamertag or Zune tag) is more important to you or which you've got the most time and money invested in. Use the
Microsoft account associated with that profile (your “primary” Microsoft account) to create a new account in the other service.

•If you decide to use the Microsoft account associated with your Xbox gamertag and not your Zune account, create a new Zune account using your primary Microsoft account. To do this:

1.Start the Zune software.

2.Right-click Sign in or your Zune tag in the upper-right corner of the screen, and then click Switch user in the drop-down list.

3.Click Create a new acct then follow the steps to create a new Zune account using the primary Microsoft account that you chose to use for all services.

•If you decide to use the Microsoft account associated with your Zune account and not your Xbox account:

1.Go to Xbox.com and click Join now.

2.Select the type of account you’d like, and then sign in with the other Microsoft account.

•Note You can still access and use the Zune or Xbox account associated with your “secondary” Microsoft account. You just can’t integrate the two.

What happens if I set up my Xbox and Windows Phone services with two different Microsoft accounts?

You will get the most out of Xbox LIVE and Windows Phone if you use the same Microsoft account to sign in to both services because you will be able to share

your Microsoft Points, gamerscore, gaming achievements, Xbox Music Pass, play counts, badges, and friends. If you set up your Windows Phone and Xbox services

using different Microsoft accounts, be aware that:

•You can’t combine or merge two accounts into one.

•You can’t migrate plays, achievements, badges, or friends from one account to another.

If you did set up your Windows 8 and Xbox services using different Microsoft accounts, the best thing to do is to determine which user profile (your gamertag or

Windows Phone tag) is more important to you or which you've got the most time and money invested in. Use the Microsoft account associated with that profile

(your “primary” Microsoft account) to create a new account in the other service.

•If you decide to use the Microsoft account associated with your Xbox gamertag and not your Windows Phone account, create a new Windows Phone account using your

primary Microsoft account. To do this:

1.Start the Zune software.

2.Right-click Sign in or your Zune tag in the upper-right corner of the screen, and then click Switch user in the drop-down list.

3.Click Create a new acct then follow the steps to create a new Windows 8 account using the primary Microsoft account that you chose to use for all services.

•If you decide to use the Microsoft account associated with your Windows 8 account and not your Xbox account:

1.Go to Xbox.com and click Join now.

2.Select the type of account you’d like, and then sign in with the other Microsoft account.

•Note You can still access and use the Zune or Xbox account associated with your “secondary” Microsoft account. You just can’t integrate the two.

from
support.xbox.com/.../manage-microsoft-account

It be some bad feedback on xbox's part. I would try doing again oin a hour or so. If not call xbox support to more help.