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: 
Since this is a Dell server, you should install OMSA managed node on it, and use that to send email and SNMP alerts about hardware issues.
Another option is to use the alerts in the DRAC, but those don't cover storage issues iirc.
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.