In XML a line break is a normal character. You can do this:
<xml>
<text>some text
with
three lines</text>
</xml>
and the contents of <text> will be
some text with three lines
If this does not work for you, you are doing something wrong. Special "workarounds" like encoding the line break are unnecessary. Stuff like \n won't work, on the other hand, because XML has no escape sequences*.
* Note that 
 is the character entity that represents a line break in serialized XML. "XML has no escape sequences" means the situation when you interact with a DOM document, setting node values through the DOM API.
This is where neither 
 nor things like \n will work, but an actual newline character will. How this character ends up in the serialized document (i.e. "file") is up to the API and should not concern you.
Since you seem to wonder where your line breaks go in HTML: Take a look into your source code, there they are. HTML ignores line breaks in source code. Use <br> tags to force line breaks on screen.
Here is a JavaScript function that inserts <br> into a multi-line string:
function nl2br(s) { return s.split(/\r?\n/).join("<br>"); }
Alternatively you can force line breaks at new line characters with CSS:
div.lines {
white-space: pre-line;
}