Question: I have XEN Server installed and running several VM's on a newer dell server with hardware raid. My concern is what happens if one of the drives fails? Can XEN server be configured to receive that error and alert someone?

Answer: 
OMSA also gives you the possibility to run executables (e.g. shell-scripts) on warning or critical-type storage events.

In that script you can check whether your array is degraded (using omreport storage ...).
If that`s the case you can start further things (e.g. live-migrate to another XEN-server). 

Once OMSA is installed smartd will possibly also capture harddisk-events (I did not verify this deeply).

I for myself trigger a mail to root using OMSA so a human can take action (call support and get a replacement disk) before the next disk fails, for example.

If you've got a DRAC-Card other than DRAC4 (older or newer) the DRAC itself won't alert upon hard disk failures, OMSA will however.
You may want to consider installing the [Dell Edition](http://www.delltechcenter.com/page/Citrix+XenServer+Dell+Edition) of Xen Server - this comes with all the Dell OpenManage stuff built in, and can almost certainly do what you're asking.