The Xml plugin depends on SideKick and the XercesPlugin.
Xerces is one of those libraries that you will find in many different places. You probably have at least 3 other versions already installed on your hard drive: one is included in every full install of ant (which is included in every Java IDE these days), another comes with JDK 1.4 and later. Further, older versions of the XML plugin included Xerces directly. It is recommended you double-check that older versions are removed. If you are having additional problems, some people have recommended that you install the newer Xerces in an endorsed directory, such as jre/lib/ext, so it overrides the older version in the JDK. See this message on the xerces-j mailing list for more details.
It's easy to figure out because the filenames changed.
Jars for Xerces 2.6-7. resolver, xml-apis, xercesImpl.
Jars for Xerces 2.3-5. (unsupported) xml-commons-resolver, xmlParserApis, xercesImpl.
If you ever encounter the error when loading the SideKickParser, be sure that the java property jedit.home is set. The ServiceManager uses this property to find other jar files. You can pass a -Djedit.home=/path/to/jedit as a parameter to the java command in the jedit startup script.