Any tools to generate an XSD schema from an XML instance document?

You can use an open source and cross-platform option: inst2xsd from Apache's XMLBeans. I find it very useful and easy.

Just download, unzip and play (it requires Java).

the Microsoft XSD inference tool is a good, free solution. Many XML editing tools, such as XmlSpy (mentioned by @Garth Gilmour) or OxygenXML Editor also have that feature. They're rather expensive, though. BizTalk Server also has an XSD inferring tool as well.

edit: I just discovered the .net XmlSchemaInference class, so if you're using .net you should consider that