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I know in lore they only fight xenos, but how good are they at fighting other marines?

They're pretty good basically because they're the best of space marines. Having all types of special issue ammo which can add a lot of wounds (poisoned 2+), insta-kill marines (AP3) and templates galore. You can also deck them out with all kinds of weapons as well.

I mean they have a bunch of ammo to deal with them so I don't see why not.

Depends on how you play them - In my opinion they're better at tackling Marines than they are at beating Xenos.

The Deathwatch troop choices are 30 or more points more expensive for a unit of five than Tactical Marine but they come standard with options for both a longer range with poison or harder hitting shells, their ap3 ammo is 18" ranged and has the "Gets Hot!" rule but their natural Special Rules can negate that.

Melee is where they truly shine over regular marines, possibly even the Wolves.
25 points for a Vanguard Veteran is a tad expensive but he's already packing a Jump Pack so for a comparison he's 4pts more than a Wolf Guard with a Jump Pack and has an identical statline but here's where the Vanguard Vet makes his points back - Vanguard Vets can be fielded as squads starting at one model and Power Weapons are 5pts a pop, the Power Fist is a tiny 15pts - In a squad of five all decked out with Power Fists and Lightning Claws you're looking at 225pts , compare that to Wolf Guard with a similar loadout you're looking at 330pts, I know Lightning Claws don't have +1 strength buffs but 105 points is a big jump.
I mentioned before that Vanguard Vet units start at one model.
How threatening would you find a few groups of single 55pt models running about packing S10 ap2 hammers?
I'd feel like some vehichles are gonna get wrecked.
It's pretty much that story across the board, Deathwatch start out expensive but make it back in oddball ways.