Fake edit: I'm not sure if there's a thread discussing this already as I haven't been able to find one. If there is, my apologies to the mods.
 
My friend hooked me up with a copy of Dead Island after I picked him up at the Sunport in Albuquerque today (after we had to stop at multiple stores just find a copy) so we could play some co-op on Live along with two other friends. We got back home and had everyone join a party only to find out that none of us could connect to a each others games. After everyone trying to host a game at least 5-10 times, we finally gave up and played solo. It continuously gave the error that the game connection was unavailable and we all made sure that our settings were set up for cooperative mode. It didn't work if we set it up with public or private slots. Is anyone else having problems connecting to a friend's game or any random games?

Yes.  My friend and I are having the exact same issue.  The crazy part is that it WILL let us join public games.  So basically, I can play with everyone except the person I want to play with. lol