What is Package.xml in magento
Actually whenever we create a new extension and upload it to magento website, we create that file.It is just a simple file containing details regarding that extension, authors, file/folder path.It is not at all harmfull.It can be generated via backend in system->magento connect->package extension.If are developing a module then it is usefull to you otherwise ignore it!
extension manifest file containing details regarding that extension, authors, file/folder path . it can be use to install plugin by back end When the folder-structure also contains a file called package.xml, there is chance that you can skip the procedure place and modify by manually alltogether. Instead, login to your MagentoConnect Manager (within the Magento backend) and try to upload the ZIP-file as a package.