Dunno, I haven't tried hooking up the Xbox, but my cable box and satellite hook in fine to the 1500 that way. It may be something to do with MacroVision-style DRM stuff, but I would be surprised they would bother using that on the standard def RCA jack.
The only thing I can suggest is tweaking the setting in WinTV, until you can get that to work, I have a feeling no other app will see the connection at all. WinTV should be up and running no problem.
Check the Hauppauge forums and knowledgebase, they are sparse, but they sometimes have the answer if it's a common problem.