I am rooted on my droid. When I pair the phone and xoom it says paired but not connected.... any ideas what's going on here?+1 this worked perfectly on my Droid.
One thing though - you have to keep the Wireless Tether app running on Bluetooth mode on your Droid or you wont be able to connect.
Someone earlier said they were able to bluetooth-tether from the Xoom without touching their phone. Not sure how that was done...