The following PrettyPrintXML method formats arbitrary XML text with indentation and line breaks in the correct places. If the XML is not well-formed, an exception will be thrown. It formats the XML text using the Formatting.Indented mode of the XmlTextWriter:

private static string PrettyPrintXML(string xmlText)
{
  string prettyPrintedXML = null;

  using (MemoryStream memoryStream = new MemoryStream())
  using (XmlTextWriter xmlTextWriter = new XmlTextWriter(memoryStream, Encoding.Unicode))
  {
    XmlDocument xmlDocument = new XmlDocument();
    
    // Load the XmlDocument with the XML.
    xmlDocument.LoadXml(xmlText.Trim());
  
    xmlTextWriter.Formatting = Formatting.Indented;
  
    // Write the XML into a formatting XmlTextWriter
    xmlDocument.WriteContentTo(xmlTextWriter);
    xmlTextWriter.Flush();
    memoryStream.Flush();
  
    // Have to rewind the MemoryStream in order to read
    // its contents.
    memoryStream.Position = 0;
  
    // Read MemoryStream contents into a StreamReader.
    using (StreamReader streamReader = new StreamReader(memoryStream))
    {
      // Extract the text from the StreamReader.
      prettyPrintedXML = streamReader.ReadToEnd();
    }
  }
  
  return prettyPrintedXML;
}

I use it that method in my C# Programmable Calculator app to pretty-print XML text from the clipboard:

private static String GetClipboardText()
{
  string result = "";

  IDataObject iData = Clipboard.GetDataObject();
 
  if (iData.GetDataPresent(DataFormats.Text)) 
  {
    result = (String) iData.GetData(DataFormats.Text); 
  }

  return result;
}

[Button("Debugging", "Pretty-Print XML in Clipboard")]
public static void PrettyPrintXML()
{
  string originalXML = GetClipboardText().Trim();

  string prettyPrintedXML = null;

  int startIndex = originalXML.IndexOf("<");
  int stopIndex  = originalXML.LastIndexOf("<");

  if (startIndex >= 0 && stopIndex > 0)
  {
    originalXML = originalXML.Substring(startIndex, stopIndex - startIndex + 1);

    try
    {
      prettyPrintedXML = PrettyPrintXML(originalXML);
    }
    catch (Exception)
    {
    }
  
    TextLines textLines = new TextLines();
    textLines.AddLine(prettyPrintedXML);
  
    SetClipboardText(prettyPrintedXML);
  
    iGUIUtils.DisplayTextLines("XML", textLines.Lines);
  }
  else
  {
    MessageBox.Show(originalXML, "Not Well-Formed XML", MessageBoxButtons.OK, MessageBoxIcon.Error);
  }
}