I isolated a BIO Acromag completely from the chassis and powered it up. The inverted behavior persisted.
Turns out this is normal behavior for the XT1111 model.
For digital outputs, one should XT1121. XT1111 should be used for digital inputs.
Slow machines Wiki page was updated along with other pieces of information.
I replaced the XT1111 Acromags with XT1121 and did some rewiring since the XT1121 cannot get the excitation voltage from the DIN rail.
I added an XT1111 Acromag for the single digital input we have in this system.