Ok but how does PC get away with it then?
Open platform of publication. As I understand it since the XB is usually serviced software via MS, they become liable to some extent for approving such software for publication. Dev mode lets you sideload, making it a non-issue.
Also, technically the emulation isn't a problem of itself. The people could probably win this legally, but considering MVG and such always promote the copyright side of things it makes it not worth pursuing. That's just in terms of what you're playing. There's grayer areas where they might have allowed some components or integrated the BIOS (big no-no). AFAIK, the bulk of emulation fun is done through RetroArch which is relatively clean. Can't speak for the other software.
Personally speaking, I think a big factor of MS eagerly stomped this was to nuke Xenia and 360 emulation. MVG and others cracked the ice by making playing copyrighted works front and center.