Wrong quote marks - <Button id='button' keyCode='alt+f4′ title='Button'/> instead of <Button id='button' keyCode='alt+f4' title='Button'/>
Wrong file name - notepad.exe.xml.txt instead of notepad.exe.xml
Wrong folder where the file is saved - it should be C:\Users\<user name>\AppData\Local\Parallels\CustomTouchBars\
Relogin or reboot is requried to see changes
Start with a small simple file like:
<TouchBar id='notepad' defaultItemIdentifiers='button'>
<Button id='button' keyCode='alt+f4' title='Button'/>
</TouchBar>
And if everything seems to be correct, share
a file to check,
what you see in Touch Bar,
and a problem report ID (get by Help > Send Technical Data...)