The problem is that 0xFF is in the extended character set and is being passed straight through to the file. Without knowing your encoding, you don't know what character it is supposed to be. This is the problem that Unicode is supposed to solve, but it does it with a careful encoding mechanism, and your 0xFF appearing raw in a file that is supposed to be Unicode is invalid Unicode, and so you get an error.

I'm not sure what the best API is for solving it, but you can solve it as follows if you have a recent enough Perl (I know that Perl 5.8 works, I dunno how bad Perl 5.6 is in this respect). If your XML file is called, say, "output.xml", then open it with, IO::File->new(">:utf8", "output.xml") and leave the rest of your code alone. (I may have that open command wrong, if I did then stare at documentation and play with it until you figure out how to convince Perl to automatically output correct Unicode.)

I won't guarantee, however, that the author of XML::Writer won't some day decide to solve the Unicode problem on his end, leading to a double-encoding and garbage output. Contacting him may therefore be worthwhile.