I plan on rebuilding my '94 XLT 580cc engine in the off season. I am going to bore out the block since I'm rebuilding anyway, but have two different routes I could take. One choice being; boring it out 1mm and using SLP 600 heads with stock 597cc pistons and rings, or the other choice of going 2mm over and using a Wiseco piston kit. Would boring it out to 616 require modifying the head/heads? Any opinions on what would be the better way to go? How would torque and HP compare?

First, be aware that you cannot use SLP 600 heads on a 580 cylinder- the SLP heads use o-rings and must bolt to a non- o-ring 600 block. Your 580 block uses o-rings, the groove is machined in the block.
You can easily bore your 580 to 600 by using Wiseco #2347M06500 pistons, or take it to a 616 using Wiseco 2347M06600 pistons. Both these pistons use your stock head with no modifications. Either of these combos will run fine but you will see no great increase in HP or torque.
A better route may be to watch eBay for a 1997 XC600 or XLT SPL cylinder and heads and the 38mm carbs. This would give you a very noticeable power gain and this stuff goes for cheap on eBay. Just make sure to get the 38mm carb version cylinder, the porting is different than the 34mm cylinder.
Jerry

Forgot about the 580s having the o-ring grooves. I think I will look for a 597cc cylinder block but I want to use the 34mm carbs. How well would the '95-96 XLT/XCR cylinder block work with the 34s? I'm not looking for a big boost in power, I just want to wake the motor up a little bit with minimal cost.

Are you looking for a 600 block?

Don