DesktopX uses Micosoft's Active Scripting technology to control DX objects. There are a several Active Scripting-compatible languages that therefore (IIRC) would work with DesktopX, VBScript and JScript being the most common.
You can perform XML/XSL processing easily in these scripting languages. Microsoft has script-friendly APIs for doing so. You can use XSL to transform the XML to whatever format you want (text, HTML, ...)
There is a DX Web Broswer Control/Script Object example that uses downlaods WinCust's newest additions list as an XML file, download an XSL file, uses the two to perform an XSL tranformation to convert the XML to HTML, then displays the result in the web browser control that's embedded on the desktop.
Its somehwere in the DX object section of this web site.