On Tuesday Microsoft and Sky launched the Sky Player on the Xbox 360 in the UK. The service stopped working pretty much right after launch due to overwhelming demand says Microsoft.
I cannot verify if the Sky Player service is now working fine on the Xbox 360. The last update from yesterday on the Xbox site says that Microsoft has implemented a revised rollout to access Sky Player on Xbox 360, to ensure that consumers experience both a smooth sign-up process and high-quality experience.
See also the Sky Player help pages on the Sky.com site.