For some har-Deployments the descriptor needs to be renamed from META-INF/hibernate-service.xml to META-INF/jboss-service.xml is seems. See JBossHibernate3 for additional details.
There is a conflict with using the jdk5 XPathFactory with the current xerces 2.7.1/xalan 2.6.2 combo that manifests as a "No XPathFctory implementation found for..." error. The xalan jar needs to be updated to the 2.7.0 version to correct this. XalanJ Download