Okay so I am doing well with this Xajax stuff coupled along with Smarty. All I need now is to have the object response to return my Smarty template with all its glorious data.
Well I must admit to feeling very silly here now, I spent ages doing the $smarty->display() however what I really wanted to do was actually $smarty->fetch in my functions so that I would be sent correctly to the Xajax object. This also means that if you have Smarty defined somewhere else, for example in a config file, you will need to use the Global keyword to allow your xajax function to access your smarty template.
HTH if not at least I will remember. It would be nice to be able to access an Object directy, but then again, not really when I think about it properly.