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XML-Data Reduced (aka "XDR") is a schema format that has been supported by Microsoft XML parsers for some years now. It has a subset of the features that are proposed for the W3C Schema language (aka "XSD") and is a reasonable step along the path to XSD. Regarding the particular differences between the languages, XDR uses instance syntax, supports the W3C XML Namespaces specification, allows open content models and supports datatypes. XSD has all that and much more. Which one you want to use now depends on a number of factors, including which parser you want to employ and the stability you require of the language and its implementations. Hopefully in the not-too-distant future it will have all sorted itself out and XSD will be the obvious choice.
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