premise: Xbox 360 applications are non-game software applications designed to run on the Xbox 360 platform. Xbox 360 applications can either be stored on the console's hard disk drive or on a USB flash drive. Often, an Xbox Live Gold membership is also required to access some applications, as well as subscriptions correspondent to the applications. Some of these applications are country specific.
hypothesis: Xbox Live Gold membership can be stored on a usb flash drive. That's how it keeps track.
reason: The Xbox live membership is clearly not saved on a usb drive.  It is stored on the servers of microsoft.  Anyone with a modicium of computer knowledge would know that. The system had difficulty because this drew on contextual knowledge that wasn't stated in the paragraph.