Hi sskodithuwakku,
The Excel VBO allows quite a diverse function when opening files. One of our processes opens an HTML file within Excel which I believe wont be too dissimilar to what you are trying to achieve, what you will have to bear in mind is formatting.
If you open an Instance of Excel and then use the Open Workbook function with the full file name (including .XML) then you should be able to open the file in Excel without any problems.
Let me know how you get on.