Hi BigZ,
Your XML file does not look right. I think that maybe you copied it from a very old version of Mach into the current version. Let me suggest a couple of things.
1. Write down all your settings and then save the XML file. Use the new Mach3Mill.xml (copy it and rename it to Mach3Milliam.xml. Then redo your settings from inside Mach 3.
2. You can go to the following Microsoft link and download the free XML Notepad if you want:
http://www.microsoft.com/Downloads/details.aspx?familyid=72D6AA49-787D-4118-BA5F-4F30FE913628&displaylang=en3. You can use the XML Notepad to see the things that are different between your XML and the new Mach3Mill.xml
4. If possible, you should uninstall the files that were installed with Xbox360_32Eng.exe if you are using XP with Service Pak 2. A better approach is to simply hook up the XBox controller and let Windows see a new device and then ask if it can search the Internet for the right drivers. It will then go to Microsoft's site and download just the files it needs for the Controller. They are slightly different from the files inside XBox360_32Eng.exe. That file was written sometime ago and has some problems. Microsoft should have replaced it with a new version. When it is right, you will see "Game Controllers" in the Control Panel. When you open the Control Panel, you will see "Controller (XBOX 360 For Windows)" and status "OK". If you click on "Properties", you will see a test window wher you can test the various buttons.
Once you have taken care of the above, I think you will be fine.
Let me know how it goes.
Lee