Is your derailleur designed for 7-speed? I'm not sure how far back XT goes but I can recall 7-speed DX derailleurs. If you are using a 9-speed or 10-speed derailleur the cage is slightly narrower and can result in rub problems which can be worse if your shifters don't have a trim feature.

Could you tell us if you have a freewheel or freehub and what its range is? That would help with specific recommendations.