I am under the impression xbee s1 modules do not need to be configured to talk
To talk efficiently, they do. The default configuration is broadcast mode, which is far slower than directed communications (one XBee talking directly to another (specific) XBee).
In that case what is the point in the Xbee Shield?
To connect the other XBee to the Arduino.
Will it be possible to process data received from the xbee in an arduino code?
Please Help, I am very new to this so often dont understand much of the lingo used.
You need start with posting links to the hardware, not the names of the hardware.