xport schematic
You must supply XPORT with 3.3V (do not use 5V). It is easier to use the same voltage for the ATMEGA128. So you can use ATMEGA128L.
If you don't have the intention to use the RS232 handshake signals provided as option by XPORT (CP1, CP2 or CP3), you can connect the DATA OUT pin of XPORT to RXD0 (or RXD1) of ATMEGA128L and the DATA IN pin to TXD0 (or TXD1).
I suggest to connect the CPx pins to others spare pins of ATMEGA128L because you can use them later (for remote programming of the ATMEGA128L via ETHERNET for example). The RESET pin of the XPORT can be routed to a push-button or other device because sometimes XPORT must be initialized by hardware.
Do not use baud rates above 115kb because you can overheat the XPORT.
I do not checked this, but it was an advice from a dealer.
I use XPORT with the redirector software as a remote serial port connected to ATMEGA162. I am sure that ATMEGA128L works in the same way.