For light stuff I use Notepad++, but for serious XML work Altova's XMLSpy is the heavy hitter.
A unique feature I like is the ability to graphically display the structure of xml schema (really handy when developing to a particular XML file type), and their Gridview gives a nice graphical display of raw xml data too.
If you do enough XML work to justify the purchase price, I'd highly recommend XMLSpy, although it's hardly a steal at €399 currently.
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