Hi,
the "find `pwd` ..." thing is actually a good idea to get the full path. But rather use "find $(pwd) ..." It's better readable!
On the other hand you could of course write the full path verbatim. This way you won't have to "cd" into the right directory beforehand.
Anyway, now for the rest -
find $(pwd) -type f -name "*.xml" -exec grep -q "searchString" {} \; -print > outputfile
wmp