How to configure Xserve to go into sleep mode when Energy Saver setting don't work?
Well, XServes are servers after all, designed to provide user services 24/7/365. I bet that there are some services (web serving, mail, iChat, etc,) turned on by default that you must first turn off before the Xserve can sleep. If you didn't setup these Xserves yourself, (or even if you did,) this Snow Leopard Server Getting Started manual may help you to find out how to look for these services in the Server Admin app to shut them down. This Snow Leopard Server Installation &amp; Setup Worksheet may also provide you with more insight.

Through Network Utility on the Xserve itself, or on the remote machine using the Xserver IP address, you could use the Port Scan tab to find out which services are being advertized, and thus which services are running. Here's a handy chart of the ports Snow Leopard Server uses.