I have the same problem as Josh-- I go back to the Ltools screen after i've installed XBMC. - Marshall
Make sure that you are copying the XBMC to the correct location. There is a file called "default.xbe" in both XBMC and at the /E/Dashboard/ location. This XBMC version should overwrite the MXM version.
I think that you might be copying the whole XBMC folder to one level deeper. For example, you might end up with all of your XBMC files located at /E/Dashboard/XBMC/ when they should be at the root /E/Dashboard/.