First of all are you running any custom graphics or skins? If so, I'd suggest removing them as they may well be causing the XML error.
Okay, first things first, if you're on XP the instructions will be different than if you're on Vista or Windows 7 so I'll try and provide as much information as I can.
Open up 'Computer' as you would normally.
Once open in the top left-hand corner you'll see 'Organize' - click this and a menu will drop down, select 'Folder layout and search options'
From here, click the 'View' tab
On the 'Advanced settings' there should be a circular box entitled 'Show hidden files, folders and drives'. Make sure this is selected.
When this is done, close the box down. Now open Computer once again and go to your C: drive
Select the 'Users' folder
In here select the 'user' you sign into when you sign into Windows (for you it could be mace for example) - it's whatever you called it.
Click on this, then in the next folder go into AppData
In here select 'Roaming'
In here select Sports Interactive -> Football Manger 2012 -> settings
For XP, it's a very similar process. Open up My Computer, the in the top corner select 'Tools'
From here select 'Folder Options'
Select the 'View' tab and make sure that 'Show hidden files and folders' is selected
Open up My Computer and go to 'Documents and settings'
Again select whatever your username is named as (if you don't have one it should be User by default)
In here select the Application Date folder
Inside here will be a Sports Interactive folder -> Football Manager 2012
Hope this helps, let me know how you get on. Thanks.