Xenophobia sucks and is mostly just a limitation. I don't use it unless I'm roleplaying an evil empire-- even then, it feels like an albatross.

Federations are useless for the player unless you are laboring under the misapprehension that 'playing tall' is a viable strategy. It is not. Interacting with other empires altogether seems pretty questionable, other than occasional non-aggression pacts out of convenience.

Militarist/spiritualist/xenophile is a good way to go for beginners, along with racial traits and civics that maximize either happiness or your economy. Militarism lets you hit harder in wars. Spiritualism reduces unrest and is an easy path to some powerful techs, including the all-important psi jump drives. Xenophilia makes it easier to integrate alien races into your empire. Mix 'em all together and it's a pretty good combination.

This is the basic strategy I use:

The key to victory is early expansion and mid-game sniping of empires that are not in federations. Since you will be destroying a lot of ships, research isn't so much of a priority since you can just research debris fields for tech. This means that you can devote your research only to the most important techs, knowing that you will gain most of your ship technology in the field.