Here is a much more minimal example. Both times I tried this once without the extra purge() and once with. Both times memory was at 166MB after the dispose().

#!/usr/bin/perl -w
use strict;
use XML::Twig;
my $inFile = '../data/2009/data_verified/abms_dialogb_10000000_1009999
+9.xml';
if ( ! $inFile ) {
    die("No input file specified");
}
if ( ! -f $inFile ) {
    die("file '$inFile' not found");
}

process($inFile);

exit 0;

#
# Process the file
#
sub process {
    $inFile =~ /data_(\d+)_(\d+)/;
    my $t= new XML::Twig( TwigHandlers=> { BIOG => \&BIOG },
                          );
    $t->parsefile( $inFile );
    $t->purge(); # Will purge work?
    $t->dispose(); # Try to Free memory but does not work...
}


#
# BIOG is XML element we are triggering
#
sub BIOG {
    my ($t, $BIOG)= @_;
    if ( ! checkBiog($BIOG->field('BIOG_NBR')) ) {
        print "Missing ". $BIOG->field('BIOG_NBR') . "\n";
    }    
    $t->purge();  # Tell XML::Twig to dispo of the rest of the tree we
+ don't care about
    return 1;
}

#
# Check database for ID
#
sub checkBiog {
    my ($biog) = @_;
    return 1;
}
[download]

I will try to work on generating an example XML file. The current XML file is licensed data that I cannot share.