This may be a stupid question, but I want to be on the safe side rather than screw my new M4gery up. The barrel is a 16' chrome lined DPMS (CMMG) labeled 1-7 .223 Cal.

Now the questions I have are..
1) Can I safely shoot Federal XM193 55 grain boat tail rounds labeled 5.56mm? (I get 500 rds of this for $95.00 through my Department.)
           OR
Should I not shoot 5.56, and only shoot .223 rounds through the .223 labeled barrel?

Im a bit confused on the difference between the two rounds..always thought they were the same.

Thanks for the help

You should have no problems using either 5.56 or .223 in your rifle. If you're really concerned, contact DPMS. They will be able to tell exactly what the chamber is reamed for.

If this is the CMMG 1/7 it has a 5.56 chamber.  DPMS just labeled .223 but they really have 5.56 chambers.  

According to CMMG the next batch will be labled correctly.

I have the same barrel and I've fired several thousand rounds or M855/SS109 and XM193 through it without any problems or malfunctions.

You should good to go with 5.56 ammo!

BTW, also make sure to check out the ammo FAQ that Troy mentioned!