I'm glad that someone had a sit-down with microsoft about this. The tourney case discussed was admittedly, probably an outlier in how severe the issue is, but sexism, racism, homophobia are still clear and present things in gaming. So much so that it's just become slang. I didn't pick up the expression "That's so gay" from my parents.
The problem is accountability. That is, there isn't any. On most games its impossible to report someone. That is, the option just isn't there. Black Ops, I remember, had a step up, there was a button when you clicked on someone's gamertag that had a report, it was that easy. And it had "sexism/racism" as an option next to inappropriate gamertag/clan tag/emblem (Black Ops had a lot of dick emblems, which is a shame because that was one of the only really memorable things about that game for me. Nothing will ever do it again because of the nightmare of dealing with it.) Anyways, in most other games that option just doesn't exist. I don't know how to report someone to microsoft, and most punishment results in a slap on the wrist. At worst, you get a day taken off your account for something like that. If Microsoft would actually hold its customers accountable for what they're doing on their services, the problem would all but disappear in a few months. That isn't to say it's localized to the xbox, but that's clearly where the problem is worst.
Also, actually making trolling a recognizable offense would help. Most sites or services just refuse to do anything about it, when in reality a system for it should have been set in place long ago. Poof, 90% of all the internets problems disappear!