The cfg or scc files are not applied with external source in the Yocto flow (upstream behavior). PetaLinux needs to handle external source with configurations applied. Therefore, it is always recommended to use cfgs instead of sccs.
Xen and openamp are handled through distro features. Adding distro features does not enable their corresponding configurations in kernel as they are handled in scc file. The solution is to edit <plnx-proj-root>/project-spec/meta-user/recipes-kernel/linux/linux-xlnx_%.bbappend.
Add the following lines:
SRC_URI += "file://xilinx-kmeta/bsp/xilinx/xen.cfg"
To work with the scc files, replace their respective cfg files using external source methodology.