Above is the clarification that was issued by ifab at the time, before it became enshrined in the 2016-2017 laws of the game.
The only thing up for debate here, which is subjective, not objective, is the obvious action and how close Xhaka is to the ball and goal keeper.
The ball practically goes as close to him as is possible without him touching it..
His being there might have impacted Schmeichels positioning and him jumping to move out the way could be considered as an obvious action.
What it isn't is a line of sight issue.
This feels like a not offside call to me, the ball is already past KS before the obvious action, however my thoughts are drawn to the definition given for 'close' so I can see How it could be given..