Error:
XML Parsing Error: undefined entity
Location: chrome://xulapp/content/main.xul
Line Number 6, Column 1:<window id="main" title="&title;" xmlns="http://www.mozilla.org/keymaster/gatekeeper/there.is.only.xul">

Error goes away if I do not use &title; entity, which is defined in main.dtd.

+ xulapp
|-+ chrome
| |-+ content
| | `-- main.xul
| |
| |-+ locale
| | `-- main.dtd
| |
| `-- chrome.manifest
|
`-+ defaults
  `-+ preferences
    `-- prefs.js

main.xul:
  <?xml version="1.0"?>

  <!DOCTYPE window SYSTEM "chrome://xulapp/locale/main.dtd">

  <window id="main" title="&title;" xmlns="http://www.mozilla.org/keymaster/gatekeeper/there.is.only.xul">
  ...
  </window>

main.dtd
  <!ENTITY title         "Look ma, a title!">

chrome.manifest:
  content xulapp file:content/
  locale xulapp en-US file:locale/