UART lines on the Xbee keep dropping to about 1.7 V? Is this something to worry about.

Which lines are you referring to? The modules lines should be at 3V or VCC when at a high state or 0V when low or left floating.

Pins 2 and 3 (DIN & DOUT) which are used for UART communication, currently I have them directly connected to the appropriate UART lines on my uC, since you say that they have high and low state is there some additional circuity that I am not accounting for on my PCB?

What voltage lefvel is your device running at?

the board is being powered at 3.3 all around, I would assume that when I am not transmitting anything on those lines (idle) , then it would be able to Vcc on those lines correct?

Sounds like you are starving the radio for power. Which XBee module are you using?

I am using the Xbee 900 HP PRO, what do you mean by starving? I thought the the operating range for the radio was from about 2.4V to about 3.6V

The operating voltage level is from 2.1V to 3.6V DC. At 3.0V (Recommended) you need to be able to supply 350 - 400mA of current otherwise your voltage level will drop as the current draw increases.

I see then, maybe that seems like the issue, since essentially I have an uC and the Xbee at 3.3V but the current setting on the power supply is not in the 350-400mA range.

I can I do that, I dont want to drive too much current and over draw the current on my uC?