the shield that I'm using is: SparkFun XBee Shield - WRL-12847 - SparkFun Electronics
It says you can connect it to 5v and it regulates the voltage down to 3.3v. I'm able to communicate between the 2 Xbee's that i have so i would think that they power that it is provided is okay.
I don't know how easy it is to see in the picture but i have the switch at DLINE which i believe is the USB side. However, I have tried it both ways as well as switching the wires up. Being that i have the switch to DLINE and the TX -> TX and RX -> RX in the form Arduino -> shield. Am I supposed to do it like TX -> RX and RX -> TX instead as I had it in the first picture that i posted?
I'm using Putty as my terminal software and it is configured as followed: http://i45.tinypic.com/29l1nxx.jpg
The device is set up as follows: http://i49.tinypic.com/535uhe.jpg
Actually those are a little mixed but have all the information none the less.