Вы просто должны добавить предложение Where,
var q = from orders in xdoc1.Descendants("OrderReport")
join ItemPrices in xdoc1.Descendants
where orders.Component.Type == "Principal"
select new
{
OrderId = orders.Element("OrderID"),
City = orders.Element("City"),
CountryRegion = orders.Element("CountryCode"),
State = orders.Element("StateOrRegion"),
Street1 = orders.Element("AddressFieldOne"),
Telephone = orders.Element("PhoneNumber"),
ZipCode = orders.Element("PostalCode"),
Name = orders.Element("Name"),
OrderDate = orders.Element("OrderDate"),
ShipMethod = orders.Element("FulfillmentMethod"),
ItemCode = orders.Element("AmazonOrderItemCode"),
SKU = orders.Element("SKU"),
QtyOrdered = orders.Element(""),
ItemTaxAmount = orders.Element(""),
ItemTaxCurrency = orders.Element(""),
ItemShipTaxAmount = orders.Element(""),
ItemShipTaxCurrency = orders.Element(""),
ItemTotalAmount = orders.Element(""),
ItemTotalCurrency = orders.Element(""),
ItemUnitPrice = orders.Element(""),
ItemCommissionAmount = orders.Element(""),
ItemCommissionCurrency = orders.Element("")
};