Final Decision.. I'm going to return this and see if I can find a POWERED USB2.0. I just tried one last thing:
dwc_otg.speed=1 added to the /boot/cmdline.txt file
This tells the Pi to run at the lowest possible bus speed. That means all the USB ports on the Pi are 1.1, the SD card slot/LAN/Wireless are all 12mpbs, and the whole system as a whole runs like it was built in the 90's. This worked, believe it or not. But the speed was too slow for my dongle to properly work. So that tells me, the keyboard is definitely 1.1 (it worked great with that low-speed) and the Xbox dongle requires at least 2.0. The green light came on to show it had power, and the Pi DID detect it, but data transmission was too slow for it to be useful.
Somebody, PLEASE!!! What is a good USB hub that works? I basically know now that I need it to be USB2.0, and it has to be powered as the Pi can't send enough power through the hub.