So, I am needing to print the data that is being sent from the arduino1 also?
Not once it's working. Until then, how else can you debug the problem?
I figured I needed to be plugged in with the usb to the arduino to read off serial and I was doing that with arduino2.
You need to have the USB cable plugged in to write to the Serial Monitor, too. The sender to receiver communication is via the XBees. The Arduino to PC communication is independent of the Arduino to Arduino communication.