Try the following which demo the problem, I also use XMLSpy">XMLSpy Version 2004 rel 
2 (on WinXP Pro SP1)

----------------------------Start of 
xmlxsdProblem.xsd----------------------------
<?xml version="1.0" encoding="UTF-8"?>
<xs:schema xmlns:xs="http://www.w3.org/2001/XMLSchema" 
elementFormDefault="qualified" attributeFormDefault="unqualified">
	<xs:element name="FormDefinition">
		<xs:complexType>
			<xs:sequence>
				<xs:element name="Description" minOccurs="0">
					<xs:complexType mixed="true">
						<xs:sequence>
							<xs:any namespace="http://www.w3.org/1999/xhtml" 
processContents="lax" maxOccurs="unbounded"/>
						</xs:sequence>
						<xs:attribute name="ReadFromDB" type="xs:boolean" use="required"/>
						<xs:attribute name="id" type="xs:integer" use="required"/>
					</xs:complexType>
				</xs:element>
			</xs:sequence>
		</xs:complexType>
	</xs:element>
</xs:schema>
----------------------------End of 
xmlxsdProblem.xsd----------------------------

----------------------------Start of 
xmlxsdProblem.xml----------------------------
<?xml version="1.0" encoding="UTF-8"?>
<FormDefinition xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" 
xsi:noNamespaceSchemaLocation="xmlxsdProblem.xsd">
<Description ReadFromDB="true" id="1">
Something before the first UL trags
	<ul xmlns="http://www.w3.org/1999/xhtml">
			<li xmlns="http://www.w3.org/1999/xhtml">aaaaa</li>
			<li xmlns="http://www.w3.org/1999/xhtml">bbbbbbbb</li>
			<li xmlns="http://www.w3.org/1999/xhtml">ccccc</li>
			<li xmlns="http://www.w3.org/1999/xhtml">ddddddd</li>
			<li xmlns="http://www.w3.org/1999/xhtml">eeeeeeee</li>
			<li xmlns="http://www.w3.org/1999/xhtml">ffffff</li>
		</ul>
*****SOS********
*****Some after the first UL tags.  I can't have any more BR tags! nor can I 
have any more UL or OL tags*****	<br xmlns="http://www.w3.org/1999/xhtml"/>
	<ol xmlns="http://www.w3.org/1999/xhtml">
			<li xmlns="http://www.w3.org/1999/xhtml">aaaaa</li>
			<li xmlns="http://www.w3.org/1999/xhtml">bbbbbbbb</li>
			<li xmlns="http://www.w3.org/1999/xhtml">ccccc</li>
			<li xmlns="http://www.w3.org/1999/xhtml">ddddddd</li>
			<li xmlns="http://www.w3.org/1999/xhtml">eeeeeeee</li>
			<li xmlns="http://www.w3.org/1999/xhtml">ffffff</li>
		</ol>
</Description>
</FormDefinition>
----------------------------End of 
xmlxsdProblem.xml----------------------------