Xbox app on PC very sluggish.

Also plug the controller into the console with a USB cable to verify it doesn't need a firmware update.

Defiantly an interesting problem. It might be a problem with the speed in which the data read via the USB causing increased latency. Have your tried a different cable? I also suggest installing the games you play most directly to the Xbox as read speeds
are usually faster when installed internally.

Are they wireless or wired controllers? Are the controllers updated? I don't know, maybe try plugging the hard drive in first. I've never heard of this problem before.

Try performing a hard reset EXACTLY like this. Hold the power button on the console for 8 seconds or until the power shuts down completely.
Unplug the power cord from the back of the console for 5 minutes.
Plug the power cord back in and restart the console.

I'm having the same issue. No games will work whether they're digital or disc-based. My system is also very sluggish and often times, freezing when attempting to load an app (or anything really).