I thought that may be there is a way to convert it to xml tags, since I need to display a difference in readable format on screen.

Of course there is a way, but you don't specify HOW it should be converted

I'd like to know if there is another way to display difference between two xml files...

Not using XML::SemanticCompare :)

That is the format XML::SemanticCompare uses for comparison of likeness

Its practically xpath, and hey, it is human readable, even if WIDE and vague :) its not meant for producing patches

#!/usr/bin/perl --
use strict;
use warnings;
use XML::SemanticCompare;

my $control = <<'__XML__';
<?xml version="1.0" encoding="UTF-8"?>
<moby:MOBY xmlns:moby="http://www.biomoby.org/moby" xmlns:foobar="http
+://www.biomoby.org/moby2">
  <moby:mobyContent>
    <moby:mobyData moby:queryID="sip_1_">
      <moby:Simple moby:articleName="allele">
        <moby:Object moby:id="cho" moby:namespace="DragonDB_Allele"/>
      </moby:Simple>
    </moby:mobyData>
  </moby:mobyContent>
</moby:MOBY>
__XML__


my $test = <<'__XML__';
<?xml version="1.0" encoding="UTF-8"?>
<moby:MOBY xmlns:moby="http://www.biomoby.org/moby" xmlns:foobar="http
+://www.biomoby.org/moby2">
  <moby:mobyContent>
    <moby:mobyData moby:queryID="sip_1_">
      <moby:Simple moby:articleName="allele">
        <moby:Object moby:id="cho" moby:namespace="DragonDB_Allele"/>
      </moby:Simple>
      <moby:Simple moby:articleName="allele2">
        <moby:Object moby:id="CHI" moby:namespace="DragonDB_Allele">fo
+o</moby:Object>
      </moby:Simple>
    </moby:mobyData>
  </moby:mobyContent>
</moby:MOBY>
__XML__



my $C = XML::SemanticCompare->new();
my $diffs_arrayref = $C->diff($control, $test) ;

for ( my $ix = 0; $ix < $#$diffs_arrayref; $ix +=2 ){
    my $a = $diffs_arrayref->[$ix];
    my $b = $diffs_arrayref->[$ix+1];
    print
        "Old: \n", fart($a),"\n",
        "New: \n", fart($b),"\n",
        "#" x 33, "\n";
}
sub fart {
    local $_ = $_[0];
    s{\'\]/}{']\n    /}g;
    return $_;
}
__END__
Old: 
/MOBY[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyContent[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyData[namespace-uri() = 'http://www.biomoby.org/moby']
    /Simple[namespace-uri() = 'http://www.biomoby.org/moby']
    /
New: 
/MOBY[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyContent[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyData[namespace-uri() = 'http://www.biomoby.org/moby']
    /Simple[namespace-uri() = 'http://www.biomoby.org/moby']
    /@[articleName='allele2' and namespace-uri() = 'http://www.biomoby
+.org/moby']
#################################
Old: 
/MOBY[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyContent[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyData[namespace-uri() = 'http://www.biomoby.org/moby']
    /Simple[namespace-uri() = 'http://www.biomoby.org/moby']
    /Object[namespace-uri() = 'http://www.biomoby.org/moby']
    /
New: 
/MOBY[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyContent[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyData[namespace-uri() = 'http://www.biomoby.org/moby']
    /Simple[namespace-uri() = 'http://www.biomoby.org/moby']
    /Object[namespace-uri() = 'http://www.biomoby.org/moby']
    /@[namespace='DragonDB_Allele' and namespace-uri() = 'http://www.b
+iomoby.org/moby']
#################################
Old: 
/MOBY[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyContent[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyData[namespace-uri() = 'http://www.biomoby.org/moby']
    /Simple[namespace-uri() = 'http://www.biomoby.org/moby']
    /Object[namespace-uri() = 'http://www.biomoby.org/moby']
    /@[id='CHI' and namespace-uri() = 'http://www.biomoby.org/moby']
New: 
/MOBY[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyContent[namespace-uri() = 'http://www.biomoby.org/moby']
    /mobyData[namespace-uri() = 'http://www.biomoby.org/moby']
    /Simple[namespace-uri() = 'http://www.biomoby.org/moby']
    /Object[namespace-uri() = 'http://www.biomoby.org/moby']
    /text()=foo
#################################
[download]

Take a close look at the source, its really not that complicated

Esp see XML::SemanticCompare::SAX sub start_element