I was able to resolve my issues.
1) uninstalled the XR1 device in device manager on streaming PC
2) ensured windows updates where all installed. I had a Intel chipset driver in optional updates. I think it helped with the USB 3 ports on the motherboard.
3) checked source PC to ensure it was outputting at 1080p resolution
4) rebooted streaming pc after updates, this is my computer where the XR1 Lite device is plugged into.
5) re-plugged the XR1 into a new USB 3.0 port on motherboard
6) removed and re-added the device in Streamlabs and OBS studio.
7) now it's showing as 1080p