Magento front end only printing "local.xml" - magento

Question

I went to do a test customer registration and right after I submitted form, the page only loads what you see below. I deleted cookies and loaded the main page, and it has what you see below as well. My coworker was messing with permissions as well, but we think we have all the permissions correct now. There are no errors in magento logs. The only error on server that may be applicable "client denied by server configuration: /var/www/Staging/public_html/app/etc/local.xml" but I know this is a common error and it's been there. Any ideas about what the issue is?
Update: We added developer mode and now we get the following stack trace:
Warning: simplexml_load_string(): Entity: line 29: parser error : Premature end of data in tag layout line 29 in /var/www/Staging/public_html/app/code/core/Mage/Core/Model/Layout/Update.php on line 444
#0 [internal function]: mageCoreErrorHandler(2, 'simplexml_load_...', '/var/www/Stagin...', 444, Array)
#1 /var/www/Staging/public_html/app/code/core/Mage/Core/Model/Layout/Update.php(444): simplexml_load_string('getFileLayoutUpdatesXml('frontend', 'default', 'f001', '1')
#3 /var/www/Staging/public_html/app/code/core/Mage/Core/Model/Layout/Update.php(347): Mage_Core_Model_Layout_Update->fetchFileLayoutUpdates()
#4 /var/www/Staging/public_html/app/code/core/Mage/Core/Model/Layout/Update.php(246): Mage_Core_Model_Layout_Update->fetchPackageLayoutUpdates('default')
#5 /var/www/Staging/public_html/app/code/core/Mage/Core/Model/Layout/Update.php(224): Mage_Core_Model_Layout_Update->merge('default')
#6 /var/www/Staging/public_html/app/code/core/Mage/Core/Controller/Varien/Action.php(306): Mage_Core_Model_Layout_Update->load()
#7 /var/www/Staging/public_html/app/code/core/Mage/Cms/Helper/Page.php(109): Mage_Core_Controller_Varien_Action->loadLayoutUpdates()
#8 /var/www/Staging/public_html/app/code/core/Mage/Cms/Helper/Page.php(52): Mage_Cms_Helper_Page->_renderPage(Object(Mage_Cms_IndexController), 'home')
#9 /var/www/Staging/public_html/app/code/core/Mage/Cms/controllers/IndexController.php(45): Mage_Cms_Helper_Page->renderPage(Object(Mage_Cms_IndexController), 'home')
#10 /var/www/Staging/public_html/app/code/core/Mage/Core/Controller/Varien/Action.php(419): Mage_Cms_IndexController->indexAction()
#11 /var/www/Staging/public_html/app/code/core/Mage/Core/Controller/Varien/Router/Standard.php(250): Mage_Core_Controller_Varien_Action->dispatch('index')
#12 /var/www/Staging/public_html/app/code/core/Mage/Core/Controller/Varien/Front.php(176): Mage_Core_Controller_Varien_Router_Standard->match(Object(Mage_Core_Controller_Request_Http))
#13 /var/www/Staging/public_html/app/code/core/Mage/Core/Model/App.php(354): Mage_Core_Controller_Varien_Front->dispatch()
#14 /var/www/Staging/public_html/app/Mage.php(683): Mage_Core_Model_App->run(Array)
#15 /var/www/Staging/public_html/index.php(87): Mage::run('', 'store')
#16 {main}

Answer 1

1)simplexml_load_string(): Entity is an common error if some xml section is not properly written
2)client denied by server : this error may come because of several reasons
i).htaccess missing
ii)File: /app/code/core/Mage/Adminhtml/Block/Notification/Security.php cooment
private function _isFileAccessible()
//$http->write(Zend_Http_Client::POST, $defaultUnsecureBaseURL . $this->_filePath);
iii)chmod 600 app/etc/local.xml
iv)http://www.yireo.com/tutorials/magento/magento-administration/1322-client-denied-by-server-configuration-appetclocalxml