XML is an extention for a file in your Mach3 folder.
If you using the lathe, you will be looking for a file called machTurn.xml.
If you're using a router, look for a file called Machmill.xml.
This file is fill with information about Mach3 setup, (how you have setup your machine)
Hood will use it to find out what could be wrong with your particular setup.
Hope this help.
Jeff