I always use my S1 for cutting but I had the need to engrave and encountered this problem. I essentially had no control over how dark the engrave came out. Every setting resulted in a very dark engrave that appeared to be made with max setting. I discovered what the problem was. I had my units set as Inches in settings. If I changed it to mm in settings all engrave settings worked as expected. I can still design my projects with Inches selected in the settings but I have to remember to change back to mm before burning. Is this normal behavior or something that will be corrected in a future update.
I think you have your machine configured as M3 mode. This means the laser will not modulate. It’s on or it’s off. this way you can’t modulate power to achieve engraving needs.
Take a look at this:
Then check if your laser is set as M4. don’t know how exactaly but, at least, in laser window you can check it.
This is from my first board controller.
If you find something like this you probably need to reinstall your board as GRBL not GRBL-M3. This is only possible if your board supports M4 commands.
I might be a little off and don’t know nothing about XTooL but I think your issue is kind of related with this.