XML and XSL support in AtgDynamo is done in a couple of different areas.  Most of the core classes can be found in the atg.xml and atg.xml.tools packages.

There are some droplets which apply specifically to XML, notably XMLTransform, XMLToDom and the Template map.  It's also possible to combine Targeting and XML together.  There's an XML repository that makes repository items out of XML documents, and Dynamo 6.0 has an Integration framework which can automatically map XML to Repository items and back.   Repository Items can also be queried, imported and exported using XML.  You can do this at run time or from the command line, using the startSQLRepository command.

There's also SOAP integration in the DCS module, which maps into a general eCommerce integration framework.