XAML is real, is pronounced zamel, and is “the language used to declaratively render the user interface of the pages that make up the application” within Longhorn. (The presentation subsystem XAML accesses is dubbed “Avalon,” the UI, “Aero.”) From an article on MSDN, here’s the simplest XAML-based file you can write:
<Image Source="lh.bmp" Canvas.Left="5" Canvas.Top="5" />
<Text Canvas.Left="90" Canvas.Top="20" FontSize="36">Hello, Longhorn!
Again, from the article:
…XAML and browser-hosted applications represent an evolution of today's client-side programming model to work over the Web. Right now, existing client-side applications can rarely be deployed over the Web. …With Longhorn, the common application model will let you write one application and deploy it over the Web. However, the final application is Longhorn-specific…
Looks a lot like XUL, but not surprisingly, seems to be incompatible. For more on what’s being called “Longhorn” or “Avalon” markup language, read the technical overview.
Also a new service pack for Windows XP is scheduled for the first half of next year. No word, that I’ve found, on whether this will also include an substantive update to Internet Explorer. My hopes aren’t high.