Now that the XBees are in API mode. We have to get the Arduino to also use the XBee API. Again, Adnrew has already done the heavy lifting for us. Download the Arduino API ZIP file from: http://code.google.com/p/xbee-arduino/
Extract and copy the XBee folder to ARDUINO_HOME/hardware/libraries or create a folder 'libraries', wherever you store your sketches, and unpack there. If you are upgrading from a previous version, be sure to delete XBee.o
Once installed I would suggest playing with the JAVA and Arduino API to make sure you can send and receive messages. There are plenty of examples provided in both libraries. Assuming you have an arduino+xbee and an XBee connected to your computer, try setting up the following: ArduinoReceiveTest.java (Computer Side) and Series2_Tx.pde (Arduino Side).
For an an instructable that relies on the XBee API mode click here
This material is based upon work supported by the National Science Foundation under Grant No. 0855886 to Kylie A. Peppler. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation.