I have always tried to use the MathJax configuration in Plugins > Filters > MathJax, to hold my setup:
MathJax.Hub.Config({
config: ["MMLorHTML.js", "Safe.js"],
jax: ["input/TeX","input/MathML","output/HTML-CSS","output/NativeMML"],
extensions: ["tex2jax.js","mml2jax.js","MathMenu.js","MathZoom.js"],
TeX: {
extensions: ["xypic.js","mhchem.js","color.js","AMSmath.js","AMSsymbols.js","noErrors.js","noUndefined.js"],
},
menuSettings: {
zoom: "Double-Click",
mpContext: true,
mpMouse: true
},
errorSettings: { message: ["!"] },
skipStartupTypeset: true,
messageStyle: "none"
});
I have only been able to get it to work using Moodle 3.4+ with MathJax 2.6 installed on my server so that I could add extensions. Every time a new Moodle or new MathJax have been released, I have not been able to get XyPic to work with the new versions.
Actually, I think your Xypic38.jpg picture is showing partial success as all the parts of the drawing are there, just not in the right locations. Maybe you could experiment and find out what is causing the incorrect placement of the arrows.