The thing that worked for me...just go ahead and click install. Your Xoom will reboot and try to install the update. It will then freeze. Hold Vol Up and Power to reboot the tablet. Update doesn't work but the notification is gone! The problem, if you turn off the tablet and reboot, the notification will pop back up. But, how often do you need to turn off the tablet?
The other option, install the new Tiamat 4G ROM.