The less episodic format led to improvements in some areas, but ultimately this season still suffers from many of the issues I had with the first season, like character designs and the repetitive interactions between characters.
Story:
Instead of being mostly episodic like its first season, xxxHOLiC Kei is presented in loosely connected arcs 2-4 episodes. This should've helped by allowing more time for developing more in-depth stories and settings, but outside of one arc towards the end the arcs felt mediocre. The couple plot twists they attempted were too predictable, and most the new characters introduced weren't interesting enough to carry the story.
Character:
I think they dropped the ball in their attempts to develop Watanuki's friend group. In the first few episodes it seemed like the relationship between Doumeki and Watanuki would develop past the very stale, one-dimensional interactions they would have in the first season, but their dynamic hardly changed. The end result is basically an ability that's used sparingly throughout the season. Himawari's development was strange and almost nonsensical, that's all I can say without spoiling. Even with these developments though, nothing really changed with their interactions. Watanuki's still unreasonably antagonistic towards Doumeki, and swoons over Himawari any times she's mentioned.
Enjoyment:
I enjoyed just one arc, which was about 4 episodes. Everything else mildly enjoyable at best and boring/repetitive at worst.
