Hello Iridium,

the problem is not due to JSitemap itself, but to some bugged plugin installed on Joomla that breaks the normal XML output format generated by Joomla itself. This is explained at this FAQ: http://storejextensions.org/faq/xml-sitemap-results-not-well-formatted.html
There is also a list of known bugged plugins, not sure if this is your case.

The link when pasted inside articles is traslated to a new sef one automatically, the resulting page should be correct XML again, unless you have some third party extension for SEF routing installed, such as sh404sef.

Thanks and regards

John