I don't think that I've moved files in the source directory. In fact I'm starting to think that this might be a cygwin problem. Here is my test file:

use XML::Parser;
print join "\n", @XML::Parser::Expat::Encoding_Path;
$xml=new XML::Parser;
$xml->parse('<?xml version="1.0" encoding="Shift_JIS"?><foo>bar</foo>'
+);
[download]

And my output

/usr/lib/perl5/site_perl/5.8.5/cygwin-thread-multi-64int/XML/Parser/En
+codings
/usr/lib/perl5/vendor_perl/5.8.5/cygwin-thread-multi-64int/XML/Parser/
+Encodings

unknown encoding at line 1, column 30, byte 30 at /usr/lib/perl5/site_
+perl/5.8.5/cygwin-thread-multi-64int/XML/Parser.pm line 187
[download]

I've created shift_jis.enc files in both the vendor perl and site perl directories, by copying the file x-sjis-cp932.enc to shift_jis.enc (Downcasing the encoding name as per documentation.)

Do you get the same error? Thanks