SQL Server 2005 should ble able to do that I think, and the express version is free. I think Sleepycat has a free XML database as well.

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Priced at $895, the Stylus Enterprise suite now arrives with a ConvertToXML module, which is a tool used for creating XML files from any flat file. Stylus also has JDBC drivers to capture table data ...

The W3C grants Recommendation status to XQuery, the XML query language designed to do for Web services what SQL did for relational databases. On Jan. 23, 2007 the W3C granted Recommendation status to ...