Xbox Live was launched November 15, 2002
COD1 was launched for the *Computer* in October 29, 2003
However COD1 was never released on the Xbox. So they never prepped it for Xbox Live, however it did have online. So I'm assuming the transition wasn't that hard.
And chickenlittle your right, H1's netcode was never designed for Live. So it would be incredibly difficult for Bungie to convert it.
It's a shame because I guess they were preparing it for Live but Live wasn't ready in time so they had to drop it. Imagine how much different everything would be.
[Edited on 11.30.2009 3:31 PM PST]