Here's how it should have gone down:
1. I explain the situation.
2. They find out the account is tied to the 360 console because of the 2-year contract and the XB1 won't ever recognize it while the contract is still in effect.
3. "Here's a code for a year's worth of XBL Gold. That'll cover you on the XB1 until your contract is over next June, then you can use one normal XBL subscription for both consoles."
4. "Thanks, you guys are the best!"
That would have taken all of five minutes, instead of several hours and still no resolution. It wouldn't have cost them anything. They've probably already spent $60 in man hours mishandling this, and generated my ill will towards their company. I don't get it.