I will post in a few minutes a tarball with the included files.

Here is a summery:

booktitle.xml:   Are included from test.03-xi.xml
mydocbook.dtd:   Loads internally the DocBook DTD + contains an
                 entity declaration db.
test.03-xi.xml:  Contains an xi:include element which points to
                 booktitle.xml
test.03.xml:     Contains just ordinary DocBook elements

The difference between test.03-xi.xml and test.03.xml are only the
xi:include element.

My catalog files seems to be correct:

$ xmlcatalog /etc/xml/catalog  "-//OASIS//DTD DocBook XML V4.2//EN"
file:///usr/share/sgml/db42xml/docbookx.dtd

First, I validate test.03.xml:

$ xmllint --noout --valid --noent test.03.xml

Everything is fine! But if I validate test.03-xi.xml xmllint gives some errors:

$ xmllint --xinclude --postvalid --noout --noent test.03-xi.xml
test.03-xi.xml:10: parser error : Entity 'db' not defined
    <title>&db; Test chapter</title>
               ^
test.03-xi.xml:11: parser error : Entity 'shy' not defined
    <para>&shy;</para>
               ^

It seems that everytime the options "--xinclude --postvalid" are used, the
above error occurs. But from my understanding these options are required by
XIncludes. So it is impossible to validate a XML file with xi:include elements.

I hope my description are helpful. :)

Tom