XML as general-purpose database?

[Ottar Smidesang Holstad]

Hi! I'm coming from building desktop applications using Borland Delphi
(Win32) with embedded databases (compiled into the executable). While I find
this a very powerfull combo, I'm looking into how I would want to make those
kind of applications using C#. As I can't offer potential customers any
direct support (it's just a sidekick), I don't want to have them dealing
with real database-servers like MSDE.

Now, let's say that the number of tables will be between 5 - 25, and the
largest tables will hold no more than 10 000 records. The data should be
held in a dataSet, so that data can easily be displayed and edited in a
dataGrid. If it can be done so that porting to MSDE later will be relatively
easy, then all the better.

Would XML-files be fitting storage for this kind of application, or would it
be more like "doable but very cumbersome to work with"?

Any recomendations on examples, projects at sourceforge.net, articles,
books, 3rd-party products etc. appreciated!