I have released code which removes our dependency on Xerces. Since Xerces in no longer special, its manifest can be generated. Post M4 we'll get the manifest file removed from the plugin. Once you get a new Equinox build you can delete the manifest yourself if you like (though you should not have to).
Note that depending on your workspace configuration, you may have update either your PDE->Target Platform preferences to get Xerces from the external application or your Equinox launcher to ensure that Xerces is included in the list of plugins in the configuration being launched.