基本问题是只创建了一个<Trust>元素，需要XML有多个重复的<Trust>元素，所以需要将这些元素的创建移到dt.AsEnumerable() lambda中。
<Id>元素也有一个bug：您正在创建名为<ID>而不是<Id>的元素。XML区分大小写，因此必须始终使用正确的大小写创建元素。
最后，一个建议：您将部门Number硬编码为"123A"，但是您可以轻松地按Number列的值对DataTable行进行分组，然后写入组键而不是硬编码值。
将所有这些放在一起，您的代码应该如下所示：

// Group the rows by Department (all 123A in your question).
var departments = dt.AsEnumerable().GroupBy(r => r.Field<string>("Number")); 

// Generate the root element
var root = new XElement("Root",
    new XElement("Type", "MyType"),
    new XElement("FileDate", "12/15/2022"),
    new XElement("Version", "2.0"),
    departments.Select(
        d =>
        new XElement("Department",
            new XElement("Number", d.Key),
            new XElement("Id", "0000"),  // Fixed, was ID
            d.Select(
                r => 
                new XElement("Trust",
                    new XElement("DeptNo", r.Field<string>("DeptNo")),  
                    new XElement("DeptName", r.Field<string>("DeptName")),   
                    new XElement("DeptCode", r.Field<string>("DeptCode")),
                    new XElement("DepartmentData", 
                        new XElement("State", r.Field<string>("State")),
                        new XElement("Date", r.Field<string>("Date")),
                        new XElement("Year", r.Field<string>("Year")),
                        new XElement("ELP", r.Field<string>("ELP"))
                    )
                )
            )
        )
    )
);

应该不需要创建XDeclaration节点，当您将XElement序列化为最终输出流时，应该自动为您编写该节点。
演示小提琴here。
但是我如何按“部门号”分组呢？我已经更新了数据表并期望XML。对不起，我没有在问题的前面提到这一点。
您可以添加一个额外的GroupBy()，以便按DeptNo对Department行进行分组，如下所示：

// Group the rows by Department (all 123A in your question).
var departments = dt.AsEnumerable().GroupBy(r => r.Field<string>("Number")); 

// Generate the root element
var root = new XElement("Root",
    new XElement("Type", "MyType"),
    new XElement("FileDate", "12/15/2022"),
    new XElement("Version", "2.0"),
    departments.Select(
        d =>
        new XElement("Department",
            new XElement("Number", d.Key),
            new XElement("Id", "0000"),  // Fixed, was ID
            // Group Departments by DeptNo. Also collect DeptName and DeptCode in the Key to use later (we assume they are consistent for each DeptNo).
            d.GroupBy(r => (DeptNo : r.Field<string>("DeptNo"), DeptName : r.Field<string>("DeptName"), DeptCode : r.Field<string>("DeptCode"))).Select(
                deptNo => 
                new XElement("Trust",
                    new XElement("DeptNo", deptNo.Key.DeptNo),  
                    new XElement("DeptName", deptNo.Key.DeptName),   
                    new XElement("DeptCode", deptNo.Key.DeptCode),
                    deptNo.Select(data =>
                        new XElement("DepartmentData", 
                            new XElement("State", data.Field<string>("State")),
                            new XElement("Date", data.Field<string>("Date")),
                            new XElement("Year", data.Field<string>("Year")),
                            new XElement("ELP", data.Field<string>("ELP"))
                        )
                    )
                )
            )
        )
    )
);

演示小提琴#2 here。