'I don't even know what it means to "know XML".'
There's definitely such a thing: Do you understand entities and how they work? (There's more to it than just & and <. Without looking it up, do you know what a Billion Laughs is, and why it's related to entities?) What's in a DTD? Do you understand XML namespaces properly? (e.g., in the tag <x:test xmlns:x="http://blah.com/ns1" att="1"/>, what namespace is "att" in? What, exactly, does the http://blah.com/ns1 mean? How does it relate to blah.com or the content at http://blah.com/ns1?) Do you have an understanding of the various schema languages? Do you understand how encodings interact with XML? Are you familiar with the terminology (e.g., can you precisely answer "What is CDATA?", with some idea of where in the XML grammar it appears and what characters are and are not allowed)? Do you know what a processing instruction is? What is the correct way to embed binary data in XML?
BTW, the answer is generally no. "Everybody" understands a subset of XML with balanced tags and simple attributes, but I'd guess single-digit percentages of the people who have "XML" on their resume really know XML, rather than the simple subset. Fortunately, as an interchange format, since nobody understands XML, nobody uses it to its full capacity, those few who try use it incorrectly, and it turns out there isn't a heck of a lot of reason to actually know the full scope of XML, since in general you're unlikely to encounter correct advanced XML anyhow. You can easily go an entire career without ever seeing the advanced features used correctly. Actually knowing XML can be almost end up being an impediment, you're almost better off having a fuzzy understanding so that when you encounter some developer's weird half-assed dialect, you're less shocked and just get on with it.
(I am aware that some of my example questions there are themselves based on false premises. Consider them trick questions.)