The flash needs to be set to use its hot foot for communication with the camera.

If you set the flash to 'Slave', it will ignore anything attached to the hot foot and will monitor its optical sensor for optical pulses from an optical master flash (or ST-E2 flash controller). You should set the flash to 'Manual' power mode in the same way you would if the flash were attached to your camera's hot shoe. As far as the flash is concerned, the X1 receiver you have attached to its hot foot is the camera.

When you change a setting via the X1 controls (or the camera's menu), you need to do a half press of the camera's shutter button to tell the X1 to transmit the change to the remote flash if it has been more than a few seconds since the TX has communicated to the flash. As far as I can tell, this is a power saving feature as the 'wake' and 'set' signals are combined in one very short transmission.

Don't forget that the 580EX II must be set via the flash's control panel to 'default' settings for power and zoom or the X1 can not change the setting on the flash. The flash should be set to 1/1 manual power (or ±0 EC in TTL mode) and "Auto" zoom (There will be an "A" to the left of the displayed zoom head position) using the control panel on the flash in order to allow the X1 to change those settings. If the flash is set to another power level (or EC setting in TTL) or a specific zoom setting (There will be an 'M' to the left of the displayed zoom head position) via the flash's control panel the X1 or camera's menu will not override those settings. Also note that pulling out the diffuser panel on the flash is manually setting the zoom to 'wide' and the zoom head will not move regardless of the setting made via the X1. You're also locked out of changing the zoom setting on the 580EX II's control panel when the diffuser panel is pulled out.