Errors related to xlive.dll can arise for a few different different reasons. For instance, a faulty application, xlive.dll has been deleted or misplaced, corrupted by malicious software present on your PC or a damaged Windows registry.
In the vast majority of cases, the solution is to properly reinstall xlive.dll on your PC, to the Windows system folder. Alternatively, some programs, notably PC games, require that the DLL file is placed in the game/application installation folder.
If the game doesn't start with error "The application has failed to start because its side-by-side configuration is incorrect..." it usually means runtime problem and you need to download and install vcredist_x86.exe from Microsoft Visual C++ 2005 redistributable. ATTENTION: if the game starts through GTAIV.exe and you get "drunk camera" it is a symptom of some conflict that prevents addon from loading and injecting the fix. Make sure that you don't have any other asi loader left in GTA folder (xlive.dll from addon is a renamed Ultimate ASI Loader), e.g. move dsound.dll and dinput8.dll away and move all .asi files away, and make sure that the only asi file you have is XLivelessAddon.asi in plugins. Then after you successfully launch the game you may add .asi files one by one and find out which one conflicts with XLivelessAddon.
A) Simple. Open the RAR archive you downloaded (if in doubt, for archiving purposes you can use 7-zip) and extract the xlive.dll file only into the game directory, that is the directory where the game and the launcher executables are located. For GTAIV that dir would look something like 2b1af7f3a8