I raised this as a bug under the subject: Xmarks keeps altering any Live RSS bookmarks to folders.
Got this response from premium support:
My apologies for the issue. RSS sync is currently not supported for Firefox 57. However, I have input a feature request for our team to consider to return this option.
I recreated my live bookmarks. So far (touch wood) Xmarks has left them alone on the Firefox 57.0.1 that I recreated them on - but when I look at them on Xmarks.com they are folders.