Microsoft released an editor for XML files, you can download it here.

Handy features include:
– Tree View synchronized with Node Text View for quick editing of node names and values.
– Incremental search (Ctrl+I) in both tree and text views, so as you type it navigates to matching nodes.
– Cut/copy/paste with full namespace support.
– Drag/drop support for easy manipulation of the tree, even across different instances of XML – Notepad and from the file system.
– Infinite undo/redo for all edit operations.
– In place popup multi-line editing of large text node values.
– Configurable fonts and colors via the options dialog.
– Full find/replace dialog with support for regex and XPath.
– Good performance on large XML documents, loading a 3mb document in about one second.
– Instant XML schema validation while you edit with errors and warnings shown in the task list window.
– Intellisense based on expected elements and attributes and enumerated simple type values.
– Support for custom editors for date, dateTime and time datatypes and other types like color.
– Handy nudge tool bar buttons for quick movement of nodes up and down the tree.
– Inplace HTML viewer for processing xml-stylesheet processing instructions.
– Built-in XML Diff tool. New features included in this version:
– Added keyboard accelerators for find again (F3) and reverse find (SHIFT+F3).
– Added support for loading IXmlBuilder and IXmlEditor implementations from different assemblies using new vs:assembly attribute.
– Made source code localizable by moving all error messages and dialog strings to .resx files.
– Added a default XSL transform.

New icons, a play on the Vista “Notepad” icons. Bug Fixes included in this version:
– Fixed install on Windows Vista machines using Windows Installer XML 3.0.
– Performance of expand node when validating.
– Fixed bug where changed schemas and transforms were not being re-loaded.
– Fixed spurious warnings about file being changed on disk.
– Fixed handling of very long text nodes.
– Fixed round trip of DTD content in tags.
– Fixed validation of elements with xsi:type attributes.
– Scroll bar not updating when node expanded/collapsed in some cases.
– Tree view needs horizontal scrollbar.
– When XML Notepad is minimized and file changes on disk, the file reload prompt is confusing. – Notepad should be restored first.
– XSL output window should pick up new xsl-transform based on input document.
– Fixed unhandled exception when closing a group of XML notepad windows.
– Added registration of “Edit” action for .xml file extension.
– Move source code to CodePlex.