If you don't have a file called Latin-1.enc under your XML/Parser/Encodings directory, get it from somewhere or make one for yourself. If you already have it, you are ready to go now.

Actually there is no such file in the Encodings directory and there is no need for one. ISO-8859-1 is understood by expat natively:

From XML::Parser doc:

ProtocolEncoding
               This is an Expat option. This sets the protocol encoding name.
               It defaults to none. The built-in encodings are: "UTF-8",
               "ISO-8859-1", "UTF-16", and "US-ASCII". Other encodings may be
               used if they have encoding maps in one of the directories in
               the @Encoding_Path list. Check the section on "ENCODINGS" for
               more information on encoding maps. Setting the protocol encod-
               ing overrides any encoding in the XML declaration.