[EDIT: I’ve gotten a surprising amount of email today accusing me or Microsoft of being homophobic. Allow me to clear that up real quickly.
The rights of Gay, Lesbian, or Transgendered individuals is a civil rights issue. I support the right of these individuals to marry and have those marriages recognized the same as anyone else’s, equally. (not civil unions, which insults me as much as "separate but equal" does as a racial strategy, but marriage as it exists for heterosexual couples)
I support their right to adopt under the exact same criteria heterosexual couples enjoy. I support legislation that protects their rights in the workplace and in society and am very proud that the Microsoft corporation is a leader in this area. I could say a lot more, but the very notion that I am a homophobe or that Microsoft is somehow homophobic is just taking the matter too far. Hopefully these public declarations will put that matter to rest.]
"[a member may not] Create a Gamertag or use text in other profile fields that may offend other members. This includes comments that look, sound like, stand for, hint at, abbreviate, or insinuate any of the following: profane words/phrases, sexually explicit language, sexual innuendo, hate speech (including but not limited to racial, ethnic, or religious slurs), illegal drugs/controlled substances, or illegal activities.
We received a complaint on the Gamertag and determined that it did indeed contain sexual innuendo. Now granted, there could be an argument that the text is not pejorative to homosexuality and should therefore be allowed. But there is no context to explain that. Gamertags are visible to everyone and it would be hard for me to defend to a parent of a young child who saw it that the name did not contain content of a sexual nature.
I just wanted to provide some transparency into the reasoning we put into the process. Hope that helps!