Hmm, that's a bit specific, you may want to try on an XBox related forum as I doubt most people here would have any experience of grabbing from XBox.

The only thing that immediately springs to mind is this:

What resolution is the XBox outputting? Are you talking XBox or XBox 360?

If greater than SD (eg 720i or 720p) then this may explain it - maybe the dazzle device does not support HD?