The Xoom FAQ website has instructions incase anyone else gets stuck in a loop...
1. Ensure your tablet is off.
2. Turn on the tablet , while the tablet is showing Motorola logo, press the volume down key.
3. Keep pressing the volume down key till '"Android recovery text" shows up up in top left corner
4. Press voulume up key to place tablet in Android recovery mode
5. While tablet is showing Android recovery screen, press and hold the power button.
6. While power button is pressed, press and release volume up key
7. You should be prompted with: wipe data/factory reset option
8. Using the volume down button, scroll down to "Wipe data/factory reset"
9. Press power to select option
10. Scroll down to select "Yes, delete all user data".
11. Use the power button to select.
12. Press the power button to reboot.