This is just wrong, there's no way around it. Regardless on your views on homosexuality, it is perfectly okay for someone to say something like that. If parents are concerned about the kiddies seeing something that they view as inappropriate, don't let them on the mostly older teen to adult Xbox Live, the ESRB even states that online interaction cannot be rated. Their are very few child-friendly games available for Live anyway.
Also, saying "I am a Lesbian" is not the same as saying a sexual fetish. If that were true then it wouldn't be allowed to say on a forum such as this one either. They were just "solving" the problem in the easiest way, getting rid of one instead of 10s to 100s. Its purely ridiculous. Even MySpace has a section to state one's sexual preference!
Thank goodness I never put my sexual preference on Live, I'd have been banned.
In fact, I'll even state my sexual preference, Bisexual, but leaning towards girls. I trust that I won't have the same issue here as she did on Live. I'd also like to state, for the record, that I am a Christian, but I have different views on quite a few things. Thanks to my friend, who knows the bible like the back of his hand and can quote exerts when he wants or needs to, usually to defend me.
I guess this proves my theory, a lot of Xbox Live Players are immature, homophobic males.