Still not sure why it produces an .xml file instead of .avi or something else, but if I RFM, I will probably figure that out.
Welcome to Non-linear video editing, I haven't read up on Cinelerra but it saves an xml file since while you are working in a project, you are not touching your data. Outside of a *very* large computer, raw dv is useless but every time you encode it, you lose quality. It would be a very bad idea to encode each time you save, which would also make saves unbearably long.
When you are done your "project" you then export(encode) it to a format you so desire.
HTH, jlc