I have been able to use the log and transfer plug in, in FCP to render my ex footage but I am rather new to this and while I seem to be editing fine at the moment I feel there is something I am missing (hopefully not) but I keep seeing the xdcam transfer software and am curious as to its use and if in fact I need it to correctly edit in FCP.

If anyone could help me it would be greatly appreciated.

You can use either plugin. For FCP 7 L&T is faster and has better features.

If anyone could help me it would be greatly appreciated.

I'm a great fan of using XDCAM Transfer as a separate app. I've made this rather rough and ready demo here:

Batch naming clips in XDCAM Transfer on Vimeo

As I edit my own material, keep source footage and project files together, and archive only QuickTime movies, it suits me down to the ground. Time spent batch naming (mostly with the client) is repaid handsomely in edits (like keeping name/job title/company info embedded into QuickTime clips).