Is it possible to use Prey on a non-phone device?
It doesn't look like there's an alternative to SMS activation just yet. Here's what they say on the Prey blog (emphasis mine):


  Prey for Android works the same way as it does in Portables and
  Desktops. The only difference is that there’s no standalone mode
  (yet), and the activation is not done via the Control Panel, but
  by sending an SMS to your phone with any message you want.


As this is currently meant for phones, if you have no data plan on a device, it cannot recieve an SMS and therefore cannot activate Prey remotely.

The good news is that it seems like standalone mode is being introduced in newer versions post v0.51, and only on Android 2.2 and above (no issue in the case of you Xoom)