We have this working successfully now:
In the XML file, the following line under <lticm:options name="course_navigation"> needs to be removed (if present):
<lticm:property name="url">PRODUCTION_URL</lticm:property>
The following needs to be added to XML files in order to use the environment variables:
<lticm:options name="environments">
<lticm:property name="launch_url">URL_FOR_PRODUCTION_GOES_HERE</lticm:property>
<lticm:property name="domain">PRODUCTION_DOMAIN</lticm:property>
<lticm:property name="test_launch_url">URL_FOR_TEST_GOES_HERE</lticm:property>
<lticm:property name="test_domain">TEST_DOMAIN</lticm:property>
<lticm:property name="beta_launch_url">URL_FOR_BETA_GOES_HERE</lticm:property>
<lticm:property name="beta_domain">BETA_DOMAIN</lticm:property>
</lticm:options>