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So if I have been using arch with infected xz library to connect to a Debian LTS server, am I compromised?
From what I've read both arch and debian stable aren't vulnerable to this. It targeted mostly debian-testing.
Arch put out a statement saying users should update to a non infected binary even though it doesn’t appear to affect Arch https://archlinux.org/news/the-xz-package-has-been-backdoored/
However, out of an abundance of caution, we advise users to remove the malicious code from their system by upgrading either way. This is because other yet-to-be discovered methods to exploit the backdoor could exist.
I would pay attention to the news. You definitely want to upgrade immediately if you have not already