In terms of electronic configuration and bonding, why is xenon regarded as an unreactive gas?

Because its outside shell is already filled with electrons; therefore, it neither wants to gain nor to lose electrons. In other words, its happy as it is and need not react with something to give away or to receive or to share electrons with another element. By the way, for years we thought Xe and the other noble gases formed no compounds with other elements; however, it does form some compounds.