+1  A: 

Here is an update for your code.

<Window x:Class="SimpleListTemplate.Window1"     
  xmlns="http://schemas.microsoft.com/winfx/2006/xaml/presentation"    
  xmlns:x="http://schemas.microsoft.com/winfx/2006/xaml"&gt;
 <Window.Resources>
    <XmlDataProvider x:Key="DcCharacters">
        <x:XData>
            <Characters xmlns="">
                <Character HeroName="Catwoman" Identity="Selina Kyle" />
                <Character HeroName="Batman" Identity="Bruce Wayne" />
                <Character HeroName="Starman" Identity="Jack Knight" />
            </Characters>
        </x:XData>
    </XmlDataProvider>
    <Style TargetType="{x:Type ListBoxItem}" x:Key="ContainerStyle">
        <Setter Property="Padding" Value="0,0,0,0"/>
    </Style>
</Window.Resources>
<Grid>
    <ListBox 
        ItemsSource="{Binding Source={StaticResource DcCharacters}, XPath=//Characters/*}"
        ItemContainerStyle="{StaticResource ContainerStyle}" 
        HorizontalContentAlignment="Stretch">
        <ListBox.ItemTemplate>
            <DataTemplate>
                <Label 
                    Content="{Binding XPath=@HeroName}"
                    Height="40"
                    VerticalContentAlignment="Center"
                    Background="LightGreen"
                    BorderThickness="2"
                    BorderBrush="DarkGreen"/>
            </DataTemplate>
        </ListBox.ItemTemplate>
    </ListBox>
</Grid>
</Window>

This may solve your problem.

Sauron