I looked into this and I cannot reproduce on a simple xml column with this:

create table mje (a int primary key, b xml);
my $data = '<xx>' . ('z' x 500) . '</xx>';
insert into mje values (1, $data);
select * from mje
[download]

I always get data truncation errors whether I use the MS ODBC driver or the MS native client driver. However, DBD::ODBC is not doing the right thing if the driver reports the column type as -152 (XML) so I've rt'ed it at Does not handle MS SQL Server xml and hope to fix it in the next few days.

I doubt the change will make any difference to you since I cannot reproduce your problem. If you get a chance to confirm the things I asked elsewhere in this node I'll look into it further.