Edit it with Notepad. Notepad should not force you to save it with a .TXT extension. It usually only forces the .TXT extension for new files - not for editing existing files.
If it DOES, then after you save the file, rename it and remove the .TXT extension.
Microsoft Word will try to get fancy with the XML file and put a bunch of stuff in it that the TD is not expecting, so don't use it to edit the file.