Previously used, unavailable Xbox Live gamertags coming back
If you’ve signed up for a gamertag on Xbox Live and had to settle for GenericTag1234567 because the name you wanted to begin with was taken or unavailable, there may just be renewed hope. Xbox Live’s Larry “Major Nelson” Hryb has announced that Microsoft is currently in the process of making “previously used and  unavailable (dead)” gamertags available.
While the Xbox Live team cannot announce when a specific gamertag is available again, Hryb outlines the process to go through in order to check.
“Sign into Xbox LIVE and go to the My Xbox channel, then select Change Gamertag. From here you can either choose from the random name generator, or you can enter a specific Gamertag to see if it’s available.”
Changing a gamertag does not alter gamerscore, achievements, or friends. However, the change runs a steep 800 Microsoft Points, unless Xbox Live automatically generated the current gamertag, in which case the first change is free.