She doesn't have the ability to fight with him yet

Even if she doesn't fight him, she can still warn everyone of his existence and his ways. They can be prepared for him better.

Easier said than done. There is no conclusive testimony or evidence. Not to mention, he's currently the strongest person on the Radiance Continent and the Headmaster of a prestigious school. What she's doing is even better; taking his potential future students/test subjects and helping them become better cultivators and practitioners!😂

The other comments have said the long explanation. But, in one sentence: "Because Xiu has not fully recovered (get his body back) yet."

I too wonder just how she will use them now that she has the cooperation of the four kingdoms. I don't think it would be good to steal from her new allies, no intelligence gathering really needed so maybe their new jobs will be assassins? Although they may still be needed to steal artifacts or blueprints that belong only to families or clans that do not want to share?

Even if they're allies, she still needs to gather intelligence that they're doing what's supposedly they do. We don't want any unexpected traitors among us, do we? As for stealing thing from them? Uuuh, she might wouldn't do it. But, it's not because they're her allies. It's not like they're her people and why should she steal it when she can openly exhort it from them?