SoaringDude, There are a few things I would consider in your situation. However I have a question. What year Xterra?

1. It is possible if you have a pull handle, something could have dropped down into the mechanism, like say a quarter...........etc.?

2. I would chase the entire cable from start to finish. Remove all trim, covers and or anything in which impedes/obstructs the view of the cables operation. Have someone operate the brake slowly and you view the operating mechanisms from start to finish checking for an obstruction.

3. Remember this is a cable actuated device. Cables cut, fray, corrode, stretch and brake! So with that being said it is entirely possible that your cable has corrosion, frayed or cut through the protective guide which it is housed in. If this is the case chasing the cable from start to finish you might find it, if not, your going to have to disconnect the cable at the drum/disc and the pull handle to operate the cable by hand. This test will allow you to feel the tension/force necessary to engage. With the cable free at both ends it should move freely, if there is friction/drag or tension at any point before the cable hits the stopping point I'd replace or determine the cause.

4. Remove the rear tires, drums and or anything obstructing your view at the braking end to see if you have anything causing the issue there.

The order in which you choose to check these things has no precedence but all are quiet possible. Hope this helps as I did not know your year.