Owner A owns 100% of Corporation XXX and 85% of Corporation YYY.
Owner B owns 0% of Corporation XXX and 15% of Corporation YYY.

Does a controlled group exist? I would say yes given Owner A's ownership percentages in both companies. But with Owner B owning 0% of Corporation XXX, I am not sure that the 50% identical ownership test is satisfied.

Also, assume a CG exists between XXX and YYY. XXX has only 2 employees (Owner A and Owner A's wife) and both are in the XXX Profit Sharing Plan. YYY has 22 employees (Owner A, Owner B, and 20 NHCEs), all of whom are in the YYY 401(k) Plan. Am I correct that both plans have to be tested as 1 employer for plan testing purposes? If so, would it be true that XXX could not provide a high allocation to the owner and spouse, while providing for only a 3% safe harbor contribution in the YYY Plan?

Thanks

I'd say it's a Brother-Sister Relationship and that it's a controlled group.

Owner A alone meets the 80% common ownership test and also the 50% identical ownership test.
Owner B is ignored in the 50% test because they have no common ownership - since they own none of A.

"Am I correct that both plans have to be tested as 1 employer for plan testing purposes?"
--Based on the information shown, Yes.

"If so, would it be true that X could not provide a high allocation to the owner and spouse, while providing for only a 3% safe harbor contribution in the Y Plan?"
--Not necessarily. If the plan passes average benefits testing, then it's ok (assumes your documents allow for this). Nondiscrimination does not imply a straight uniform allocation formula is required.