PeterH:
I suggest you study the instructions for your XBee shield to check how it's intended to be used, but what you're doing doesn't sound right to me. If you're running with the XBee serial port connected to the Arduino's hardware serial port then I don't think it is a good idea to also connect the Arduino's serial port to the PC. A serial connection is designed to connect two end points, not three.
That's a good point. Unfortunately, there are no instructions to check, but I can probably ask the question in the Sparkfun comments. If the XBee was interfering with the serial monitor, I would expect to see some garbled characters from time to time, or most of the time, but I don't; only a couple when I first reboot the Arduino. I did a little test and slid the switch on the xbee shield so the xbee was not connected to the serial pins anymore, then I rebooted. I still had the same issue with a couple of garbled characters in serial monitor at the start of a reboot. So the XBee communicating over serial doesn't seem to be the cause.