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So, if you follow the 'Ask the Performance Team' blog, you've probably seen the intro and troubleshooting tips for Side-by-side.
There is a lot more information about this on MSDN, which is very useful (I should probably say necessary) to do correct redistributions of MSXML 4 and make sure your application works as you intend it to. MSXML 4, as the documentation mentions, has side-by-side support.
The preferred way to go, of course, is to simply use MSXML 6, which has a number of improvements and can be serviced directly as an operating system component on Windows Vista and above.