I admit I don't have the X360, but I did read the strat guide and I think I could also help, altough I do not like to give out spoliers, so don't worry about any problems.
I'm tryin' to bring some light to the rumors of a theives guild here in Cyrodiil.
There seems to be some conflicting opinions. I'll get to the bottom of it sooner or later.
Have you thought of joining the (rumored) Theives Guild, as part of an undercover sting operation to find out who the leader and "whack" him? It could pose to be a morally complex delimma to be sure, but you are a Blade Knight, and in Morrowind, it is revealed that the Blades are the so-called "secret police" of the Empire, so I think you can justify it for your character.
I have a bad, bad feeling that you may not actually find out if this Theives Guild exist (presumbly to destroy it), so if you want help, just contact me to assist you.