This is not the first time I am fighting with positivity (nonnegativity).
But this problem looks not natural enough for a standard technique, and
it seems to me that the resulting sequence $x_k(t)$ is always between
$\sqrt{1-t}$ and $1$, in the sense that the expansions of $x_k(t)-\sqrt{1-t}$
and $1-x_k(t)$ have nonnegative coefficients only.
I can only give a partial solution. After the change
$$
z_k(t)=1-\frac{x_k(t)}{\sqrt{1-t}}
$$
the recursion for $x_k(t)$ translates into
$$
z_{k+1}=\frac{z_k^3(4-3z_k)}{8(1-z_k)^3}
\quad\text{for}\quad k=0,1,2,\dots
$$
with the initial data
$$
z_0=1-\frac1{\sqrt{1-t}}=-\frac12t+O(t^2).
$$
The recursion implies $z_{k+1}=z_k^3/2+O(z_k^4)$, therefore
by induction on $k$ we obtain
$$
z_k=-\frac{t^{3^k}}{2^{(3^{k+1}-1)/2}}+\text{higher terms}.
$$
This implies that
$$
x_k(t)=\sqrt{1-t}-\sqrt{1-t}z_k(t)
$$
agrees with $\sqrt{1-t}$ up to the term $t^{3^k}$. In particular,
as the expansion of $\sqrt{1-t}$ involves negative coefficients besides
the constant term, we conclude that $c_{k,i}<0$ for $i=1,2,\dots,3^k$
in the expansion
$$
x_k(t)=1+\sum_{k=1}^\infty c_{k,i}t^i.
$$