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I just posted an article What does server side FOR XML return? (https://blogs.msdn.com/sqlprogrammability/articles/576095.aspx) which gives some details of the design and performance characteristics of various FOR XML flavors.
I also added links to XML whitepapers and publications on the design of XML features in Microsoft SQL Server 2005 to the links section of the main SQL Programmability & API Development Team Blog page (https://blogs.msdn.com/sqlprogrammability/default.aspx).
Best regards,
Eugene Kogan
Technical Lead
Microsoft SQL Server Relational Engine