Just my 2 cents:
1. If unmodded Freelancer runs fine, then everything went to hell once modded, it’s the mod.
2. The XML parser is there to parse the internal XML format that Freelancer uses to display formatted text. It effects unmodded Freelancer as well, and a mod cannot change how Freelancer program handles text display.
3. Based on my experience (which came from activate and deactivating my own (abandoned) mod for no less than 5,000 times), the error “Error: problem deactivating …” often means that you need to reinstall the game from fresh (Make sure Freelancer is deleted from the “Program Files” without a single file left). Normally, I backup the fully installed&patched game before open FLMM so I can restore it quickly.
4. In my memory, FLMM is kind messy. You should only install one on your computer, not multiple, and you don’t want to active multiple mods at same time. Also, you have to manually deactivate everything on it before you uninstall FLMM.