The usage is fairly comprehensive. Just look at the demo project.
The XML file is not really a XML, in that it doesn't have a root element or doctype, but it doesn't really matter. Just follow this pattern for defining your own flares:
<flare texture="texture path" distance="position of the flare" />
Position < 0 => The flare will be behind the position of the light
Position = 0 => The flare will be at the position of the light source
Position > 0 && < 1 The flare will be somewhere between the light source and the centre of the screen
Position = 1 => The flare will reside always at the centre of the screen (I don't recommend this)
Position > 1 => The flare will be behind the centre of the screen
This is my scene node in action