Will my CANADIAN credit card work with a USA xbox live account?
Yes, and possibly no. The fact that your card, regardless of the “branding” (Sears) or issuer (whichever bank actually loans you the money every single time you swipe), is a MasterCard will mean that it is accepted worldwide, wherever MasterCard is accepted. However, the problem you MAY run into is NOT with your credit card per se. Being unfamiliar with Xbox accounts or Microsoft’s sign-up process, I can only imagine that it’s Microsoft who’ll deny you the account. What you’ll need, if simply trying to sign up won’t work, is a US-based address. If you have a TRUSTED friend in the US, see if you can “borrow” their home address for the purpose of account creation.
