If you're wondering what personal and private information is in "iTunes Music Library.xml", couldn't you open it up and look for yourself?
"What happens if a bunch of users have information in that file that they have pirated songs and the service gets a subpoena to disclose all xml files?"
Whoa, with absolutely zero knowledge of the .xml file, you just jumped 100 steps ahead to some hypothetical situation where this website will incriminate its users. Loosen up your tinfoil hat a little bit...
You're asking a ton of questions about a service that is obviously just starting out, and is probably not feature complete yet. Did you actually use the site, and can you provide any comments on how well the site actually does what it advertises? If not, your comment just seems like a lot of bikeshedding:
http://en.wikipedia.org/wiki/Parkinson%27s_Law_of_Triviality