Suggestion:
The unsecured part leaves your network vulnerable but only to people who are really close to your location.. like your next door neighbors could hack into it if they have the knowledge and desire but it does not affect anything you will encounter on the internet.. as far as the internet stuff goes it's the same as everyone else..
If I were you I would ask whoever set up the network why it is set that way.. if they don't have a reason or they think it doesn't matter ask if you can turn on the security.. maybe explain that someone else could send threatening emails or do other illegal activity on their network and because it's their account they could end up having to prove it was someone else to the police.. my dad was like that thinking "I don't have anything anyone wants to steal" what they want to steal is your internet access not your files..
When you do set up security use WPA or WPA2 and not WEP.. WEP can be cracked in like 5 seconds..
If the Xbox won't connect see if they have MAC filtering turned on.. if they do you need to add your Xbox's MAC ID to the list in the router.. Some people think MAC filtering alone is enough for security and they don't want to slow down their wireless with encryption.. it really isn't.. MAC addresses can be spoofed (intercepted and copied to another device) and the filtering only prevents connections to the network.. not interception of data so someone could be watching everything anyone on your network is doing..
If it's not the MAC filter check that the DHCP service is configured correctly.. DHCP is what hands out IP addresses.. without a valid IP, Subnet Mask and Gateway address from DHCP (or manually applied) you wont be able to connect to the internet..
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