For the NPC designer format, you need to cut and paste the XML into the db.xml file in your campaign folder under the <node name="NPC" /> tag.
Make sure that you post the text under this, so you will get the following: (as an example)
node name="npc">
<category name="Hommlet" mergeid="" baseicon="3" decalicon="0">
<node name="00001">
<stringvalue name="ac">AC 21, touch 13, flat-footed 10</stringvalue>
<stringvalue name="advancement"></stringvalue>
<stringvalue name="alignment">NG</stringvalue>
<stringvalue name="atk">Atk +12 melee (1d8+5/x3, +1 battleaxe ) or +11 ranged (1d8+4/x3, masterwork mighty composite longbow [+4 Str bonus])</stringvalue>
<stringvalue name="babgrp">+6/+10</stringvalue>
<intvalue name="charisma">11</intvalue>
<intvalue name="constitution">17</intvalue>
<intvalue name="cr">6</intvalue>
<intvalue name="dexterity">16</intvalue>
<stringvalue name="environment"></stringvalue>
<stringvalue name="feats">Endurance, Point Blank Shot, Power Attack, Track, Weapon Focus (battleaxe), Weapon Focus (longbow) (Rapid Shot and Manyshot) while wearing L Armor or less)</stringvalue>
<intvalue name="fortitudesave">8</intvalue>
<stringvalue name="fullatk">Full Atk +12/+7 melee (1d8+5/x3, +1 battleaxe ) or +11/+6 ranged (1d8+4/x3, masterwork composite longbow [+4 Str bonus]</stringvalue>
<stringvalue name="hd">6d8+18</stringvalue>
<intvalue name="hp">44</intvalue>
<intvalue name="init">3</intvalue>
<intvalue name="intelligence">15</intvalue>
<stringvalue name="leveladjustment"></stringvalue>
<stringvalue name="name">Elmo</stringvalue>
<stringvalue name="organization"></stringvalue>
<intvalue name="reflexsave">8</intvalue>
<stringvalue name="skills">Climb +11, Concentration +6, Handle Animal +6, Hide +7, Knowledge (nature) +13, Listen +12, Move Silently +7, Ride +12, Search +5, Survival +12, Swim +9, Use Rope +8</stringvalue>
<stringvalue name="spacereach"></stringvalue>
<stringvalue name="specialattacks">Favored enemy (goblinoids +4, undead +2)</stringvalue>
<stringvalue name="specialqualities">Archery combat style (see Feats)</stringvalue>
<stringvalue name="speed">30 FT</stringvalue>
<intvalue name="strength">19</intvalue>
<formattedtext name="text">
<p><b>Special Qualities: </b>n/a </p>
<p><b>Spells Prepared: </b><i><b>Ranger </b>(2; base DC 13 + spell level): 1st- delay poison, speak with animals. </i></p>
<p><b>Spells Known: </b>n/a </p>
<p><b>Domain Spells: </b>n/a </p>
<p><b>Description: </b>Elmo is captain of the militia, living off treasure earned when he and his brother helped Canoness Ydey and others fight against the Temple of Elemental Evil. </p>
<p>Elmo is willing to undertake dangerous tasks if doing so is for the good of the town. Hes not interested in gaining further treasure or exploring. He isnt concerned with anything very far out of town (such as the hobgoblins in the old temple), but he#92s very grateful to anyone who deals with such problems. Getting on Elmos good side is a smart idea, because he has a lot of influence in the town. If he is at the Innof the Welcome Wench, Burne and Rufus are likely to show up eventually to share a drink. </p>
<p>Elmo is a good friend of Jaroo and unfortunately does not realize that the druid is dead, replaced by a doppelganger (see area 26). So fiendish is the creature#92s ruse that it was able to convince him that Yundi, the grove#92s assistant druid, has been acting strange lately and bears watching. If Elmo is convinced to help with or take part in some operation, such as confronting the cultists in the mill, he insists on bringing Jaroo along. </p>
<p>He has not yet made up his mind whether to worry about the moathouse. He knows all too well from past experience that signs of activity there might mean danger from the temple itself; he lost his brother when the evil rose up a second time. He is also aware of hobgoblin bandits that operate in and around the old temple grounds. In fact, he and others of the militia have fought them many times before, eventually convincing the evil humanoids to stay away from Hommlet: it#92s too well defended. </p>
<p>Elmo gets along very well with Yether at the church of Pelor(see area 2). He does not interact with Canoness Y#92dey or anyone associated with the Church of St. Cuthbert, though. He still blames Y#92dey for the death of his brother Otis twelve years ago, when she and he fought together against the second rise of the Temple of Elemental Evil. (Y#92dey was not able to get to Otis#92s body quickly enough to raise him.) </p>
<p><b>Items of Note: </b><i>+1 chain shirt, +1 heavy wooden shield, +1 battleaxe, masterwork mighty composite longbow (+4 Str bonus), 40 arrows, 31 gp </i></p>
</formattedtext>
<stringvalue name="treasure"></stringvalue>
<stringvalue name="type">Ranger 6</stringvalue>
<intvalue name="willsave">5</intvalue>
<intvalue name="wisdom">16</intvalue>
</node>
</category>
</node>
Hope that this helps.
Sandeman