It is supposed to work with FCPXML just fine. I've done testing and it linked correctly, but that was with everything on the same drives and no movement of the media. Make sure your XML is located at a level above the folder containing all the media. Sometimes that helps with Smoke.
FCPX XML generates absolute rather than relative links to the media in use at the time. If the media is in a different location when you reload the XML then you need to either use the target app's relinking facility or do a search and replace in the XML file with a text editor to change the location references.
I tried various find and replace formats for the source file path but to no avail.
However, I also created a simple edit in FCPX, having imported the media afresh, rather than the relinking I did with the 'bad' project. The exported XML conformed successfully in Smoke.
Interestingly there's no difference between the XML path metadata of both projects (see below).
project name="New Project" uid="126D2F7B-C5D8-43F3-BC95-CAA7E21F714D" eventID="C042BA3B-BDD8-4EA6-A1D7-B6953D63DBCD" location="file://localhost/Volumes/Krissy_Reel/Final%20Cut%20Projects/New%20Project/">
These XMLs are v1.2 but couldn't see an option to revert to v1.1