Where to start, First all you need to do is cut the xenias as close to the base as possible with a razor and/or sissors. Then you can either try glueing the frag to a rock or the way I do it is stick a toothpick into the piece you cut off then rubber band the toothpick tightly to a piece of rubble with the frag touching the rock. Within a week or so it will be attached and growing, just be patient though, leave the tothpick in the frag for several weeks before trying to remove, that way you don't risk detaching the frag.
What are the dimensions of the frag tank?
You can use a hang on filter, that won't be an issue. I would definitely suggest getting a protien skimmer. You can get a cheap one if you would like but just make sure it works propoerly, you are going to want to maitain the same water quality in your frag tank as you do in your display tank.
I would also still put a deep sand bed and live rock to help with the biological filtration.
Also depending on the depth of your tank I would suggest builing an eggcrate shelf in the tank so that your frags will be no more than about 8-10" under the waters surface. This will increase the light intesity and cause them to grow faster. PCs don't penitrate the water very well so the higher up the better.
HTH! Good Luck!