Where does XML fit into eLearning?

XML can be used as a display language when combined with style sheets.
You can then embed scripts to provide some level of dynamic/interactive
content. This would be like saying PostScript can be used to define how
a page is rendered. You can embed pictures so that they appear on the page.

XML is really designed as a data storage format. As such, people
typically put all the data into one file. This is similar to having a
Word document that has all the content in one document. However, when
viewing pages on the web, you should really have a "web" of documents.
If you save a Word document in web format, you get one long document.
You can have internal links that take you from one place in the document
to another, but you are still looking at one long page. Web sites
consist of collections of files, with each page of content consisting of
a separate (or several) files. These files could be built using XML, or
you could save some time by building them in HTML, which is
fundamentally a display language rather than a data storage format.
Please convey this in your white-paper so that people will get away from
saying that "XML" is the solution. XML is a tool. Good content
organization, layout, and functionality, also known as "instructional
design", is the solution.