Actually, the xtb binary is almost certainly there and is being found. Unfortunately there’s a bug with Avogadro itself where the first field in any plugin’s dialog is emptied, see here. You’ll see that the same thing happens in the Configure, Run, and Conformers dialogs.
It’s tedious, but you can check what path is being used by looking at your config file at Avogadro/commands/avo_xtb/config.json.
Assuming that an xtb installation is being picked up, the pre-configured commands like xtb => Optimize etc. will work, so stick to those where possible for now.
If you need to use Run or Conformers, as a workaround for now you can copy the path from config.json and paste it into the empty box in the dialog. If the box is filled, everything will work fine, it’s just that the automatic population with the previously known value fails.
Let me know if this works for you.