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Is the Xbox 360 in the same room as your MacBook Air laptop? If it is, couldn't you just use the wireless Xbox controller and just play facing your computer screen?
BTW, it would seem something like an EasyCap[www.amazon.com] would be a cheaper route than a full-fledged video capture card.
I think the OP wants to use In-Home Streaming to stream the video and audio feed displayed from the video capture application (included with the capture card) running on his Windows 8.1 desktop PC to his MacBook Air, which should be possible. He can just add the Video Capture application as a non-Steam game on his Windows PC and then stream it from the Mac Steam client on his MacBook.
You'd have to use the controller that's hooked up to your 360 for input, though, and I'm not sure if the audio will come through the MacBook since "desktop mode" streaming is a bit of a hack.
The wireless controller has a somewhat decent range.
The distance appears to be just at the limit of the controller range, so I think Ill try the simple solution and move the xbox closer to see if that solves the problem.
Thanks for the some helpful suggestions !