Are you going to do all the labor yourself? If not, fiqure paying some "labor" charges to that. In the LBS where I worked, we frowned upon installing someone's parts they bought on-line and not through us.
Selling parts a shops bread and butter. Kinda like going to the grocery store, buying a nice T-Bone and taking it to Outback and asking them to cook it for you!
The other thing to note, is that your bike is a $400 to $500 bike, and the frame, fork, wheels, components are all spec'd accordingly. You are now going to spend $250 on your bike to upgrade it, but it'll still only be worth $300 used! Harsh reality, but a used bike in that range will only be worth so much. If you're not going to ever sell it, then don't worry about this issue! I sell my bikes on a regular basis, so it's always a concern of mine.
I think your shop is just watching out for you! If you are willing to pay $$ for XT, will you be happy with your current fork??? If not, figure another $350-$400, what about your wheels? Figure another $300 for XT hubs and Mavic X317 wheels....etc. For the same $$$, you can buy a completely new bike.
However, if you are only going to swap out the drivetrain components, then go for. $250 sounds like a good deal.
L8R
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"Life is not a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside, thoroughly used up, totally worn out, and loudly proclaiming, "WOW, What a Ride!" - unknown
"Your Bike Sucks" - Sky Yaeger