So dremmel through the tumbler?
NO. Read the tutorial, you are drilling the pin out so you can remove the assembly from the column.

Do i still need to remove the pins?
You drill out the one pin that is holding it in the column.

Also how do i remove the wire harness from the back?
As I recall, you simply pull the connector off the back - I think I used pliers but it yanks off.

I am planning to order the new ignition switch and tumbler and suggestions where to buy and what part number works best?
I have no idea, in my expericence, there is no need to buy expensive lock parts. The only place I know of would be a CHrysler dealer.

I just want to throw it out there I have 167K on my XFire!!!!!and counting!!
You did good to get that far without this happening earlier. Mine started to fail at 44000 miles and I fixed it without drilling - but again, I got to it before it locked up completely; by simply following the tutorial in post #1.