The text is importing into AI but not being interpreted correctly.

Try exporting to PDF and bring that into AI. PDF is one of Illustrator's native file formats and works better then passing files between the two programs.

Another thing you can do, make a copy of your original Xara document (in case you need to edit the text) and in the copy convert the text to editable shapes (or if you do not have this option in Arrange) Combine Shapes, Add Shapes. You will not be able to edit the text in Illustrator but it will import correctly as vector shapes.