I will post two examples, one that validates and one that doesn't. I am interested in learning why the second one doesn't work since they are very similar.
Example 1 (validates)
xsd:
<xsd:schema xmlns:xsd="http://www.w3.org/2001/XMLSchema" >
<xsd:element name="root" type="BBB"/>
<xsd:complexType name="AAA">
<xsd:choice maxOccurs="2">
<xsd:element name="x" type="xsd:string"/>
<xsd:element name="y" type="xsd:string"/>
</xsd:choice>
</xsd:complexType>
<xsd:complexType name="BBB">
<xsd:complexContent>
<xsd:extension base="AAA"/>
</xsd:complexContent>
</xsd:complexType>
</xsd:schema>
xml:
<root xsi:noNamespaceSchemaLocation="incorrect.xsd" xmlns="" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" >
<x>1</x>
<y>1</y>
</root>
Example 2 (does not validate)
xsd:
<xsd:schema xmlns:xsd="http://www.w3.org/2001/XMLSchema" >
<xsd:element name="root" type="BBB"/>
<xsd:complexType name="AAA">
<xsd:choice maxOccurs="2">
<xsd:element name="x" type="xsd:string"/>
<xsd:element name="y" type="xsd:string"/>
</xsd:choice>
</xsd:complexType>
<xsd:complexType name="BBB">
<xsd:complexContent>
<xsd:extension base="AAA">
<xsd:choice>
<xsd:element name="z" type="xsd:string"/>
</xsd:choice>
</xsd:extension>
</xsd:complexContent>
</xsd:complexType>
</xsd:schema>
xml: (the same as Example 1)
<root xsi:noNamespaceSchemaLocation="incorrect.xsd" xmlns="" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" >
<x>1</x>
<y>1</y>
</root>
To save you the time running the diff against the xsd's, the only difference is that in the second example complex type BBB has a <choice>
xmllint says the following about Example 2:
$ xmllint --noout --schema example2.xsd example2.xml
example2.xml:3: element y: Schemas validity error : Element 'y': This element is not expected. Expected is ( z ).
example2.xml fails to validate
Examples loosely based off of http://www.zvon.org/xxl/XMLSchemaTutorial/Output/ser_ext_patterns_st1.html