I found an answer to this question here:

http://blogs.msdn.com/xmlteam/archiv...-explorer.aspx

Basically:

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Use MSXML 6.0 - it is “in the box” on Vista and available for download on Win2k, XP, and 2003. It has the best security, performance, reliability, and W3C conformance
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MSXML 3.0 is our preferred “fallback” - It is installed on every OS from a fully patched Win2k SP4 installation on up, so it requires “zero-deployment” and is serviced regularly with the OS
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MSXML 4.0 was released to the web about 5 years ago, but at this point has been superseded by MSXML 6.0 and is only intended to support legacy applications
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MSXML 5.0 for Microsoft Office Applications is purpose-built for Office applications and isn’t intended for broad deployment. Internet Explorer 7 actually has the MSXML5 components "off-by-default" in the Internet zone so your customers will get a goldbar for each MSXML5 control on a page if your code tries to instantiate it. The best recommendation is to avoid MSXML5 in your web apps (only machines with Office 2003 or higher will have it, anyway.).