The heating up is happening on the Atmega chip and the Xbee only
It could be that this is perfectly normal and what you would expect from the current it is taking. I assume that is only a rise of 20C.
Is it in a box? Is there any air flow?
The arduino could be getting hot because of current draw from an output pin. The Xbee could be getting hot from a poor impedance match with the antenna.