Is there a legal form letter that can be sent requesting items be returned in good condition and in a timely manner?

Yes, and you have already written the best part. "You are still in possession of my XYZ, as we agreed in March. Please return my XYZ to me in good condition no later than November 1. If you would like to keep my XYZ beyond that date, or you cannot return it in good condition, I will expect you to pay me for its loss or damage."