this should make it work.

net-im/palaver/files/palaver-confd

@@ -1,2 +1,2 @@
 # location of the configuration file
-CONFIG=/etc/jabber/palaver.xml
+CONFIG=/etc/jabber/palaver.conf

net-im/palaver/files/palaver-initd

@@ -10,9 +10,10 @@ depend() {
 
 start() {
 	ebegin "Starting Palaver MUC service"
+	source ${CONFIG}
 	start-stop-daemon --start --pidfile /var/run/jabber/palaver.pid -u jabber -g jabber \
-		--exec /usr/bin/twistd -- -l /var/log/jabber/palaver.log --pidfile /var/run/jabber/palaver.pid \
-		palaver -c ${CONFIG}
+		--exec /usr/bin/twistd -- -l $LOG/palaver.log --pidfile /var/run/jabber/palaver.pid \
+		palaver --jid=$JID --rhost=$RHOST --rport=$RPORT --secret=$SECRET --spool=$SPOOL
 	eend $?
 }
 

net-im/palaver/files/palaver.conf

@@ -0,0 +1,6 @@
+JID=conference.example.com
+RHOST=localhost
+RPORT=5347
+SECRET=password
+SPOOL=/var/spool/jabber/
+LOG=/var/log/jabber/

net-im/palaver/palaver-9999.ebuild

@@ -38,18 +38,18 @@ src_install() {
 	distutils_src_install
 
 	insinto /etc/jabber
-	newins example-config.xml ${PN}.xml
-	fperms 600 /etc/jabber/${PN}.xml
-	fowners jabber:jabber /etc/jabber/${PN}.xml
-	dosed \
-		"s:<spool>[^\<]*</spool>:<spool>/var/spool/jabber</spool>:" \
-		/etc/jabber/${PN}.xml
+	newins "${FILESDIR}/"palaver.conf ${PN}.conf
+	fperms 600 /etc/jabber/${PN}.conf
+	fowners jabber:jabber /etc/jabber/${PN}.conf
+#	dosed \
+#		"s:<spool>[^\<]*</spool>:<spool>/var/spool/jabber</spool>:" \
+#		/etc/jabber/${PN}.xml
 
 	newinitd "${FILESDIR}/${PN}-initd" ${PN}
 	newconfd "${FILESDIR}/${PN}-confd" ${PN}
 }
 
 pkg_postinst() {
-	einfo "A sample config file has been installed into /etc/jabber/${PN}.xml."
+	einfo "A sample config file has been installed into /etc/jabber/${PN}.conf."
 	einfo "Please adjust the settings as needed."
 }