HTML Tidy is useful for reformatting XML, just configure it like this:

Name: Format
Command: tidy.exe
Folder: %d
Parameters: -iqm -xml -newline CRLF –tab-size 4 ”%f”
Save: Current File
[x] This tool will modify the current file

This sets up tidy to format the current file (saving any changes you have first). It is possible to configure this as a filter instead (so that it just modifies text without touching the file) but this has some encoding change problems so is not detailed here.