Don't try to create a markup structure this way. Use unique element names. What you are attempting to do here, and if you succeed, will create an overly complex and uneccessary burden on the programs that process the XML instance.
But I have created the whole application and its working fine...for recursive element it was easy to parse as I wrote the recursive function...
I have to create xsd for validation. I have no other option.
Please suggest solution.
Come on. I know nothing about Schema but when I googled just "xs:sequence" and read the first link, I found it has a "minOccurs" attribute whose default value is 1. And that, it seems to me, is precisely what the error message is saying. Your schema can't describe any XML document of finite size.
And yes, I agree with Jimmy Clark that a design with meaningless element names is usually not a good design.