Probably because you have too many XML files that contain <book></book>. Look into xargs, or the - option for grep.
$ find /path -name '*.xml' -exec grep 'pattern1' {} /dev/null \; | cut -d: -f1 | grep 'pattern2' -
print pack("A25",pack("V*",map{1919242272+$_}(34481450,-49737472,6228,0,-285028276,6979,-1380265972)))
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Well that's probably because the argument list is too long ;)
You can write a simple bash loop to get around this;
for i in $(find . -type f -name "*.xml" -print -exec grep -i '<book></
+book>' {} \;);do grep -i "<name=>*.*Sydney*.*" $i && echo $i;done
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