I had used this extension with success some times ago (say, last month), including schema validation and formatting.
When I came back to it, editing the same XML files I did before, suddenly the only item offered by the command palette had become "XML: Open XML Documentation", and nothing works (validation, formatting, auto-closing tag when typing "/"...).
I have tried to reinstall the extension, remove every personnalized settings, install the RC version, disable all other extensions... in vain. (Note: vscode-xml was my latest installed extension.)