Plugging in Xbee to my PCB , I see no activity on my UART lines? Are they suppose to set low or high?

Yes some of the lines should be high and some should be low.

See when I am flashing the code to my uC and then transmit , the lines fluctuate, they dont idle high or low at all?

Sounds like you may need to add an external pull up/down resistors on the lines.

Well I didnt see on the schematic for the Xbee 900 HP Development so I assumed it did not require any additional circuitry?

Normally you would be correct in that external pull up/down resistors would not be required. But in your case, you are leaving Inputs in floating positions which could cause issues. So in this case, small pull up/down resistors may actually be needed.