My Xbox will not install the offline update.

Are you using a disc to install? If so why not try installing the disc offline first then apply updates after.

Using Xbox Offline

Once you have installed the game from the disc without a network connection, reconnect and update your game through My Apps & Games.

Hoping this will work if it is a disc based install

800701e7 - error

The system update that is trying to install is failing validation during the system update file verification.

Solution:

To resolve this issue, you will need to install the Offline System Update Diagnostic Tool.

Link to the the update:
support.xbox.com/.../offline-system-update-diagnostic-tool

Are you using a disc to install? If so why not try installing the disc offline first then apply updates after.

Using Xbox Offline

Once you have installed the game from the disc without a network connection, reconnect and update your game through My Apps & Games.

Hoping this will work if it is a disc based install

No sorry this is digital based, I should've been more specific. But thanks anyways!

I had to turn off my router, remove the disc, delete the Advanced Warfare "install", hard boot the Xbone-1, and then re-insert the disc and install offline. Once the offline install was done it downloaded a 250Mb update, so no its not an issue with the
update or their servers, its the stupid Xbone-1.

Hey there PenguinMaster27!

I'm happy to help clarify things with you.

To clarify, an Xbox One console can be used offline provided it is put into offline mode and here's how! Using Xbox One offline

The console does need to be updated when it's first out of the box, this can be done offline as well though, you'll just need to use the offline update tool here. I
need help with system updates on my Xbox One/Update Xbox One offline

Of course like you mentioned, some games require an online connection such as MMORPG's like The Elder Scrolls Online and that's consistent across all platforms including PC. Not all games require this though, It's on a case by case basis and up to the developers.
Check the game packaging for more information on if an online connection is required to play.

That said, you can also use many game discs offline without updating though. In fact, it's actually a troubleshooting step to install games to the console offline if someone is having an issue installing the update during the game install.

I hope this helps to clarify things a bit for you and give you some ideas on how you can play Xbox One offline if you prefer to play offline.