They might have met once or twice whenever Irvine stops by Balamb to issue or upgrade the weapons of cadets' choice. If he ever figured out that Xerxes is one of his little ducks, he'd be proud of himself that his advice actually helped someone.
I think Irvine and Dona have most likely acknowledged each others attractiveness, with varying levels of feigned antagonism. I think they might recognize the charade they each are putting on, and winkingly play their respective parts whenever they have to work together.