I think the disagreement between Valve and Microsoft stems from a few issues:
First, Valve created and owns Steam for the PC. By and large, the extra content via Steam for TF2 is free. As a result, Valve is coming at it from almost a freeware angle.
Microsoft with Xbox Live wants to charge for each and every little content down to the wrist watch on your Live Avatar. When you have one esteemed developer who has basically a freeware platform (concerning after release patches and content) wanting to bring that content to Microsoft, there will be a fundamental disagreement on whether it should be priced and exactly how much.
Second, Valve may actually be quite envious of Microsoft's Xbox Live being so lucrative compared to Steam. PC gaming compared to consoles in the past decade is down the tubes in profit potential for game developers. Xbox Live being the Microsoft equivalent of Steam has found a boon in console gaming that Valve has not quite found in comparable numbers with Steam and PC gaming.
Finally, Valve is letting management speak when the board should shut them up. Allowing Gabe Newell to run his mouth without a PR rep right by his side may cause Valve to burn bridges and future profitability with one of the console makers. A single interview from a higher up gives us all insight on the corporate culture. If that corporate culture is openly dismissive and possibly antagonistic towards one of the console makers, then don't underestimate either of the console makers. Sony, Microsoft and Nintendo are powerful enough alone to blackball a company such as Valve. Valve never created Mario, Gran Turismo, or Halo which are 10 million seller series and the faces of the console. What has Valve done for either Microsoft, Sony or Nintendo that they have not done themselves? Port the Orange Box? Puh-lease.
