Is it possible to directly edit the XML of XIB files?

Answer 1

To answer your question (as you put it in the title): Yes, it is. I did it with TextWrangler for a test (moved a widget) and it works like a charm.

I suspect, you also changed something else (encoding, file name) when you were editing the file. You should try it again with a copy of the xib and do a diff between original and result.

Answer 2

It is possible. Just the task's complexity is approaching the complexity of writing an web app in assembler.

Joking. It's highly not recommended. I think this Xib is not your and Interface builder is just not allowing you to use it.