Ok, Ross. I do not know what skinning Xion is these days, it's been a while. But I changed the xsf to a zip, extracted the psd, opened it in Photoshop, and deleted the background layer and the snaprectangle layer, and it moves fine now. I saved the psd and then just dragged it into a running Xion skin, and it switched to yours and all is well. I don't know if the layers I deleted are needed, but it appears to work fine.
I have no idea what the snaprectangle layer was, but it was unchecked in PS anyway, so it wasn't being used. The huge black background is also unnecessary.
Try what I did, it'll fix it.