They seem pretty powerful until you consider this:
They were said to be exceptionally talented, and they have been practicing the MOST advanced martial arts for 70-80 years. While someone like Xiao Feng has been practicing LESS prestigious martial arts for only about 25 years. And most people seem to agree that Xiaoyao Sect elders are only about 1.1-1.5x better than Xiao Feng, not dramatically.
Logically, I think Xiaoyao Sect elders should be able to wipe the floor with Xiao Feng, Xiao Yuanshan, and Murong Bo. But that doesn't seem to be the case.