There is good article on new XML tools in VS 2005. Our team used to own VS XML editor back in VS 2003, but now we concentrate on HTML ans ASP.NET. Whidbey XML editor is brand new code written in C# on top of VS native text editor by a different team. It is specifically designed to edit XML, XSL and tightly integrated with XSLT debugger. ASP.NET team still provides ASP.NET-related validation schemas, such as one for web.config.
As you might know, VS HTML editor does handle XHTML as well. We use our own XSD schemas that allows us to handle ASP.NET-specific attributes such as runat=”server”, server directives, provide intellisense in inline style attributes as well as code intellisense in client script blocks.
If you wish to validate static XHTML pages using W3C DTDs instead, you can instead employ the new XML editor. Read the article mentioned above in order to learn how to add your own DTDs. New XML Editor comes with every version of VS including Express Edition. However, XSLT debugger, as far as I know, only comes in higher-end versions.