Your code is somewhat confusing as to whether you want to return the unsigned char[16] as a Perl array/list (16 individual values), or as a scalar (Perl string of length 16).

Assuming the latter, I think you're approaching things in a much too complicated way.  Simply create a char[16] buffer in C, let XSessionID() fill it, and place a copy of it in an SV, which you then return:

#!/usr/bin/perl -wl
use strict;
use Inline C => <<'END_C';

SV* GenerateSessionID() {

    char uuid[16];    // buffer

    // fill buffer, i.e. mimic your XSessionID()
    int i;
    for (i=0; i<16; i++) {
        uuid[i] = 0xA0 + i;
    }

    return newSVpvn(uuid, 16);
}
END_C

my $uuid = GenerateSessionID();
print join ' ', unpack("(H2)*", $uuid);
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Output:

$ ./962624.pl
a0 a1 a2 a3 a4 a5 a6 a7 a8 a9 aa ab ac ad ae af
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Not using Inline::C (i.e. using a normal XSUB instead), this should translate to something like

SV *
GenerateSessionID()
    PREINIT:
        char uuid[16];
    CODE:
        XSessionID((uuid_t*)uuid);
        RETVAL = newSVpvn(uuid, 16);
    OUTPUT:
        RETVAL
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Or, if you want to use PPCODE:

void
GenerateSessionID()
    PREINIT:
        char uuid[16];
    PPCODE:
        XSessionID((uuid_t*)uuid);
        ST(0) = newSVpvn(uuid, 16);
        sv_2mortal(ST(0));
        XSRETURN(1);
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Thank you so much for the quick reply. Indeed, your solution is very elegant. I am a newbie in xsubb. I did use the second method.

 PREINIT:
        unsigned char uuid_arr[16];
    CODE:
        char convert_arr[33];
        int i;
        XGenerateSessionID((uuid_t*) &uuid_arr);
        memset(convert_arr,'\0',33);
        for(i=0; i< 16; i++){
         snprintf(&convert_arr[i*2], sizeof(convert_arr)-(i*2), "%02X"
+, uuid_arr[i]);
        }
        RETVAL = newSVpvn(convert_arr,33);
    OUTPUT:    
         RETVAL
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If I had not converted the unsigned char back to char, the compiler complains of signedness.

Or, if you want to use PPCODE:

void
GenerateSessionID()
    PREINIT:
        char uuid[16];
    PPCODE:
        XSessionID((uuid_t*)uuid);
        ST(0) = newSVpvn(uuid, 16);
        sv_2mortal(ST(0));
        XSRETURN(1);
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Thats quite bloated. This is less bloated.

void
GenerateSessionID()
    PREINIT:
        char uuid[16] = {0); //zero fill
    PPCODE:
        XSessionID((uuid_t*)uuid);
        PUSHs(sv_2mortal((newSVpvn(uuid, 16)));
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Also the OP might want to zero his UUID since we are not checking the return value of XSessionID to determine failure.

You are extending the stack by 17 scalars:

EXTEND(SP,17);</c>
<p>But then pushing a single scalar <c>PUSHs( sv_2mortal( ...) );</c> 

<p>And that scalar is an SvPV that points to a C-string: <c>newSVpv( (
+char*)array,(int)len )</c>

<p>If you want to push that string as 16 (no point in return the null 
+in a searate scalar) individual unisgned values, you will need to loo
+p over the string extracting the byte values, creating SvUV's from ea
+ch one and then push each onto the stack. 

<p>Something like:<code>
EXTEND( SP, 16 );
for( i=0; i < 16; ++i ) 
    PUSHs( sv_2mortal( newSVuv( array[ i ] ) ) );
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Also, there is no point in this: sv_setpvn(session_id, "\0",len); //Intializing it to NULL? Don't know if this wrks

1) it will already have been initialised to nulls by newSVpvn(array,17); //allocating memory 16 + 1 for null

2) if it wasn't initialised to nulls it wouldn't matter because the Xsession() sub is going to overwrite it anyway.