Visual Studio 2008 and XML Tools
Sure - it's a little late in coming, but still feels good to say that Visual Studio 2008 has shipped! You can try the 90-day trial versions or the FREE Express Editions of Visual Studio 2008 right now and get started.
There are a ton of cool new features and improvements on the XML Editor and XSLT Debugging (not available in the Express Editions) fronts that can help you be more productive working with XML data.
A couple of my favorite features are the automatic XSD generation from XML files which allows you to have validation and intellisense on any XML file you are working with and the ability to set breakpoints in the input XML files that an XSLT is actually transforming.
A great way to get introduced to the XML / XSLT tools in VS 2008 is through this article by Stan Kitsis in this special issue of the CoDe Focus Magazine which is dedicated to Data Programmability technologies:
There is another interesting article in an earlier issue written by Chris Lovett (creator of the immensely popular free tool XML Notepad 2007) which provides a much more detailed view of how the XML Editor is evolving into a platform which other tools and designers can use to work with XML documents:
You should also check out the set of data programmability technologies that will allow SQL Server 2008 to be a very rich experience for developers.