Stolen gamertag

Ring Xbox Support and report the gamertag stolen.

Not sure how your gamertag could be "stolen" from you.

You cannot know for sure wether the gamertag is not being used,gamertags are used on other services,not just xbox live.

If it says the tag is taken then that's it,you will have to think of another tag

Contact Support for further help and @Xx Gamer 2015 you wont win against Microsoft

It might not be stolen,

Are you sure you put in the original email address for the account?

If you put in an unused email it would have auto-generated a new gamertag. Think back to any older emails you might have used. If you don't remember the password for them you can attempt to reset it at www.xbox.com/forgot.

Also a call to xbox support could help as well.

If you have talked to phone support and they escalated it up to the escalations team at the same time they would have had you create a new account and put that information into the form to escalate your situation up to the escalations team. once it is escalated
up normally it takes up to 72 hours for the escalations team to transfer everything over to your new account including your gamertag, score and any digital content that was purchased on the original account. If phone support did their job correctly they should
have explained all of this to you when doing the escalation. so what you would want to do is keep an eye on the email for the account that you created because that is how the escalation team will contact you letting you know everything has been moved over.
I would suggest call back xbox phone support and asking them what the status on the escalation is. they should be able to tell you what the status on it is.