It was my ignorance. I took a closer look at the error and was able to fix on my own.... Essentially I have now added a top level tag called EntitiesDescriptor
<?xml version="1.0" encoding="UTF-8"?>
Hey Shikari Shambhu (my childhood hero) - if you have got things working with Salesforce as SP, you should definitely contibute a cheatsheet for the benefit of the PicketLink community.