This CAN be done with 2 pads on one XBox! Start a local multiplayer game and choose any track but be sure to choose "Stunt-Mode". You must finish the race with both player. The Achievement will pop up as soon your back in the game lobby.
Edit 1: Last confirm for working solution by adamrulz
June 22, 2013
Edit 2: You must use the SIGN IN AS GUEST option on the SECOND pad
Thx for the comments