To start with there are only 4 types of Xenobe (pronounced 'ZeN-oBe' also called Xen or xen), this is what they do every 5 minutes:
Sentinel - these do not move.
Explorer - these move between sectors.
Trader - these move between sectors and trade if possible.
Hunter - these move between sectors and hunt for human players.

All Xen have the capability to attack humans, what they do depends on their aggression setting (this is called mood in-game as it seems more fitting):
Peaceful - These guys do nothing, they are fighter fodder.
Aggressive - These guys attack sometimes so be careful around them.
Hostile - Caution! These have a mean temper and are liable to attack if your too nosy around them.

Currently the Xen play every 5 minutes, whereas the player updates are every 6 minutes, this creates the illusion that the xenobe are 'alive' as they move in between the player updates, the code creates new Xen to replace those that died since the last update to keep the number of Xen at the maximum amount allowed within the universe, Xen do not re-incarnate once they are dead they do not come back, if you do spot one at a later date with the same name as one you've already killed it really is a freakish co-incidence.

When a Xen is created its size is determined by a formula that takes the average size of all the other Xen that are alive and then adds a random number to the Xen average(avg) which is then used for the Xens level.
For example, at the time of writing this guide the Xen avg in the universe is 4.19 (or 4 as the code would actually read it).
The formula would add a random number between -4 and +5 to the Xen avg giving a Xen size range of 0 to 9 any Xen that ends up with a minus level would be made a random level between 1 and the maximum starting size allowed for Xen. There is also a maximum size limit for the Xen, this stops undefeatable ones from being created, although this may change at a later date...
Any Hunters created also get an additional +3 boost to their starting level so using the above Xen avg of 4.19 you could have a Hunter being created at any level from 3 (0+3) to 12 (9+3).
Hunters are also intelligent, they will scan a potential target to see if it is safe for them to attack, due to current sensor limitations your ships computers are unaware of the Xenobe scans, if it is safe for the Xen then say goodbye to your ship, if it isn't safe for the Xen, as in you are bigger than it, it will quietly sneak away, leaving you none the wiser to its having been in the same sector as you...

As well as following their chosen paths all Xen have the chance to change, create or delete warp-links, this depends on Zone rules allowing warp editors and on the Xen being ordered to do so.
A small percentage of Xen also get to own planets, these will either be unowned ones they capture or planets created for them.
Due to their limited movement and therefore limited earning potential, Xen receive credits every player update, currently this is set at 100,000. So the longer a Xen lives the wealthier it becomes.
Xen also grow in size over time, if they live long enough they will upgrade all of their ship levels by 1, then if they live long enough they'll upgrade again, then rinse, repeat, etc.

And finally, here on gunslingersworld.com servers you will never get a bounty for attacking a Xenobe.