embedXcode: Link Error using an Arduino library (Servo.h) within a header file
I ended up contacting the developer of the embedXcode plugin. He was very helpful and provided the fix within a day. The cause of the issue is apparently the Arduino IDE has changed its library structure in the latest release.

The next version of embedXcode (release 4.1.4.) will include a fix for this, however if you can't wait until then you need to open ArduinoAVR_165.mk (located in the Makefiles group in Xcode) in your project and add the following line:

avr165_20 += $(foreach dir,$(APP_LIB_PATH),$(patsubst %,$(dir)/%/src/$(BUILD_CORE),$(APP_LIBS_LIST)))


After you add this line, the file should look like this:

# Two locations for Arduino libraries
#
APP_LIB_PATH = $(APPLICATION_PATH)/libraries
APP_LIB_PATH += $(APPLICATION_PATH)/hardware/arduino/$(BUILD_CORE)/libraries

avr165_20 = $(foreach dir,$(APP_LIB_PATH),$(patsubst %,$(dir)/%,$(APP_LIBS_LIST)))
avr165_20 += $(foreach dir,$(APP_LIB_PATH),$(patsubst %,$(dir)/%/utility,$(APP_LIBS_LIST)))
avr165_20 += $(foreach dir,$(APP_LIB_PATH),$(patsubst %,$(dir)/%/src,$(APP_LIBS_LIST)))
avr165_20 += $(foreach dir,$(APP_LIB_PATH),$(patsubst %,$(dir)/%/src/utility,$(APP_LIBS_LIST)))
avr165_20 += $(foreach dir,$(APP_LIB_PATH),$(patsubst %,$(dir)/%/src/$(BUILD_CORE),$(APP_LIBS_LIST)))
avr165_20 += $(foreach dir,$(APP_LIB_PATH),$(patsubst %,$(dir)/%/src/arch/$(BUILD_CORE),$(APP_LIBS_LIST)))


Note that each project has its own ArduinoAVR_165.mk file, so you will have to make this change in each project until you update to the new release.