You can do either
ICS
Simply put another NIC (Network Interface Card) into the PC and run that to the X-Box, then start up ICS and it will allow the X-Box to access the web through the PC.
Advantages
* Cheap as you only need to spend about a tenner on the NIC and obviously the cable
Disadvantages
* The obvious disadvantage is that you need to have your PC on to access the web.
* ICS can sometimes be a little slow if your PC is not particuarly fast or someone decides to start using it

* You can only connect two machines together so there is no scope for expansion.
Router
Acquire a 4 port router or wireless router. As you have BT Openworld USB (Home 500?) you will likely only have one static IP address. This means you have to setup your router to spoof the IP you have been given (essentially tell BT that it is your PC), this is relatively straight forward and will be covered in the instructions. Disconnect the USB Modem, connect the routers ADSL Uplink via the RJ11 port, plug in the PC and configure the router with the IP address, plug in the X-Box and away you go.
Advantages
* You do not have to leave your PC on to access the web.
* You have plenty of room to add more machines (ie other future consoles or PCs).
* Generally a router is a lot quicker with dealing with packets and latency so your ping will not be affected unless you are downloading heavily on the PC/X-Box.
Disadvantages
* Can be a little more difficult to set up if you want to look at port forwarding etc. Although you are not actually able to do this through ICS (as far as I know). This can affect some Peer 2 Peer software and poorly written multiplayer games

* Is a good deal more expensive, it costs around 100 squid for a wires router and around 150 for a cheap wireless router plus 45 per wireless NIC.
Personally, I feel the advantages that lie in the router far outweigh the advantages of ICS. ICS would only be recommended if you are extremely short of cash and need a cheap stop gap. You will soon get frustrated with having to have the PC on and also if you do decide to add another machine you wil need to go the router route anyway. You can always offset the cost of the router by selling the USB modem, although it is always handy to have backups.
Also, it is worth bearing in mind, that PCs are generally far more likely to stop working than a router, nothing worse than your PC crashing or, at worst, blowing up and your net connection going down.