You can redistribute the 3.0 SP1 parser along with your application.
If you use windows installer technology,
You can use the merge module of the 3.0 SP1 parser
or you can use the CAB redist package
both links provide documentation on how to use them.
As for xmlinst.exe, if your application uses version dependent
progid(which is highly recommended practice), for example
MSXML2.Document30 or MSXML2.DOMDocument.3.0, which will automatically use
new 3.0 SP1 dll to create objects, you don't need to run xmlinst.
Otherwise, you may need to run
Note, xmlinst is mainly for testing and maintaning backward compatibility.