Let me see if I can correctly rephrase the question, to make sure I understand:

I need to place  <para> ... </para> tags around every line of a file, except when the line happens to contain a  <title> tag. The code I've tried is:

s/(?!<title>(.*?)\n/<para>$1<\/para>/isg;
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If I have that right, you don't really need negative look-ahead. You just need to have a conditional statement that controls whether or not the regex substitution applies -- in fact, you don't really need a regex substitution at all.

Since you say that the file is composed of lines, and the tags are supposed to be added on every line (except any with a "title" tag), it will be easier to handle the data line-by-line, rather than in a single "slurped" scalar:

while (<>) {
    if ( not /^<title>/ ) {
        chomp;
        $_ = "<para>" . $_ . "</para>\n";
    }
    print;
}
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(update: added ^ anchor to the regex, because the question mentioned looking for that tag at the start of a line)