I just released a new article based on another true story.
We had a performance problem with a SQL Stored Procedure with a big XML chunk of data as one of the argument and the parsing we had was not optimal for that size of data.
Using various technique, I was finally able to solve that problem.
You can read the full article from http://www.emoreau.com/Entries/Articles/2010/09/Processing-large-XML-data-from-SQL.aspx