The climate requirements to run at this hotter temperature still probably means it'll require more active cooling in the desert during daytime /summers. Assuming we're talking about hotter desert environments like US southwest. That might make your proposal not as economical.

Imo we should just solve the problems with data centers being near cities. Manage/regulate the noise and any waste (heat included, it shouldn't drastically impact the neighbors) and make them pay for any utility capacity/reliability upgrades needed. If this article is right and water usage can be nearly eliminated then it seems like the rest should be solvable? Especially if we can take the extra heat and use it for local power or heating needs.

You might (but probably not) be able to do district heating with this, but electricity generation is not going to be efficient. Heat is a very low grade form of energy, and you need a large differential to drive a turbine efficiently.

If you cycle between 45 C and 55 C water temperature (as mentioned by the press release), you are only getting a 10 C delta. That isn't even enough for district heating, probably not even with heat pumps.

Now if you have something like a steel foundry, that have much hotter cooling water, you can absolutely use the heat for district heating, but even then it usually isn't enough for cost effective electricity generation. Even when it is waste heat, as the equipment to handle it still costs money and requires maintenance.