The Extensible Markup Language (XML) is considered as the de facto standard for information processing and exchange on the Internet and in the enterprise services domain. It is widely regarded that XML has the potential of being an interoperable standard for interactive applications in the next generation connected Consumer Electronic devices. A key industry concern in using XML in CE devices is that how basic security requirements pertaining to the above said domain can be met. Notably, the standardization bodies of the Internet domain such as W3C and OASIS have defined specifications for cryptography-based security solutions using XML technology that is mainly aimed for web applications. This paper investigates and presents various scenarios where XML Security can be applied to markup based interactive applications in the context of a next generation Consumer Electronic Optical Disc Player. We conclude the paper by presenting a prototype establishing how these scenarios could be real...