Yes, you're absolutely right. You have to use a snapshot from snaps.php.net, they've got the problem sorted out. The lib supplied with PHP was buggy at least in the snapshot I dl'd, but the Expat lib worked great and PHP compiled without complaints.
Also you might want to ditch the whole Sablotron and try out Apache Cocoon, especially if you already have JavaServlets available in your server...
Check out xml.apache.org. Cool stuff.
-jani