I had a minecraft error saying You can't play online multiplayer through xbox live because of how your account is set up

Change your account settings to allow online play.

Do you have a Xbox Live account with a Gold subscription? If not, you'll need to buy a subscription.

Do you have a child account on a console with parental policies that disallow online play? If so, either convert your child account to an adult account, and/or, disable the parental policies on the console.