Dilip, You rarely, if ever, have to modify these files directly. The graphical interfaces allow you to set most common options. There are a few unsupported ones (I don't recall which ones at the moment.)
The graphical screens are just a view for the xml files. So if you feel comfortable editing the XML directly this is fine too. Often, I find it faster to modify the XML than hunting for a certain option. It is also faster for a search and replace.