can anyone shed some light as to what i may be doing wrong?
Other than running X-CTU, you haven't really told us what you are doing, so it's hard to say what of that is wrong.
Have you removed the ATMega328 chip from the Arduino? That is necessary if you want to use it as a carrier for the shield while configuring the XBee. Be sure to note which way it goes for when you want to put it back.