You can use any text editor to edit the xml files.
Yes, there is a text file (SkinDictionary.txt) that defines the size and position of most of the UI elements. If you wish to change the layout of a panel, you will need to include the correct section from that file in the SkinDefinition.xml file.
If you only wish to change the art, you do not need to worry about it.
You can also try using the
skin editor to avoid loading/reloading the game to check your changes. Its a bit out of date, but should be fairly accurate still.