SiteEdit allows you to edit your content in the HTML of your website. Therefore, if you render the content of the (valid) HTML and add the correct SiteEdit commands to this HTML, you can edit it.
SiteEdit will not allow editing the source XML file that you publish. I usually expected to find the same content as HTML, somewhere else on the website, and include SiteEdit there.
If you really think it makes sense to edit content in an XML-like presentation, I suggest finding XSLT that converts XML to HTML representation (as Internet Explorer shows) and add this as a dynamic component template in Tridion. If you then enter the necessary SiteEdit commands in this HTML, you can edit the result in SiteEdit. This, of course, will become HTML, but it will still look like you are editing the original XML.
source share