I've personally seen this in two separate projects that decided they needed their own XML parser. In one case, they simply didn't know better. And proceeded to get the basics wrong, like empty elements.
In the other case, they used XML for no good reason, then, gasp, decided parsing 30KB XML files all over the place (thousands a second, deeply integrated into all parts of the code) wasn't very quick. So they copied libxml's source, then hacked it up, breaking things like character encoding. Oh, and they added an XML pre-processor while they were at it, to do file includes and variable substitution. Thus it's not even compatible with XML, yet they still pay all the overhead. Awesome.
In the other case, they used XML for no good reason, then, gasp, decided parsing 30KB XML files all over the place (thousands a second, deeply integrated into all parts of the code) wasn't very quick. So they copied libxml's source, then hacked it up, breaking things like character encoding. Oh, and they added an XML pre-processor while they were at it, to do file includes and variable substitution. Thus it's not even compatible with XML, yet they still pay all the overhead. Awesome.