Well, I was able to figure out the permission part and it works as saving the pdf's now; which is great. As far as the XML file; i will talk to our system administrator to check the server side to make sure XML entry is there. Since we are using the local Reader now the options are not grayed out. We will use the method of opening PDF file through Adobe Reader application for now, till we find the way of opening the PDF from the browser with Check in and Out option to edit it local Adobe Application.
Thank you for your help. I will update on this discussion.