I have a problem with this news XML plugin, as well. The plugin generated a news XML feed, but it's empty. I have opted to include posts in the news xml, and when I go to posts, they are checked to be included in the feed, by default. However, the XML sitemap is empty.
I would like it populated with all my old posts. Maybe I'm not understanding how this works, and it's only supposed to contain timely, new posts and not archives. Am I doing something wrong?