Latest firmware in conflict with audio return channel on soundbar ?

It is connected via hdmi arc directly to the soundbar. arc is just the shortform for HDMI audio return channel.

Depending on your TV, the Audio Return Channel might not support surround sound from other inputs, like the other HDMI input from your Xbox. Most TVs only send multi-channel audio via ARC if the sound is produced in the TV's tuner, like Live TV, or attached
media drives.

Since the Bose Soundbar seemingly supports optical TOSLINK, your best option would be to add an optical cable between your Soundbar, and the optical output of your Xbox console.

And specifically for this part, the
ARC stands for Audio Return Channel, which is basically just so the display and soundbar can communicate. That is also not required for 4k.

It seems that your TV supports Audio Return Channel (ARC). However, on the TV's specification page I don't see if it supports Dolby Atmos through ARC.

If your TV is capable to send Dolby Atmos via ARC, you'd connect your Xbox to a 4K capable HDMI port OTHER than the HDMI ARC port on your TV.

You will then get 4K resolution on the TV screen, and the TV would "forward" audio via the Audio Return Channel to the sound bar. If supported, this will then be Dolby Atmos.

It seems that the Soundbar doesn't support 4K pass through. So either you would need a new TV that supports Dolby Atmos via ARC, or a new soundbar or AV receiver that supports 4K video.

As the Xbox One X is an audio source, it doesn't need to send or receive audio via ARC or eARC.

Audio Return Channel is only for TV's that are supposed to "return" Audio back to an AV receiver or connected Soundbar.

As the Xbox One X doesn't have speakers to play audio recieved through ARC, it won't support "ARC" or "eARC". Your TV needs to support ARC or eARC.

What exactly is your TV and console setup, that you would need eARC in the Xbox One X?