[Aetae]

Правка к первой задаче:

$(xml).find('struct member:contains("USER_CITY") string').each( function( i, val ) {
  var city = $( val ).text();
  $('.author_city').append('<a href="$PROFILE_URL$">' + city + '</a>');
})

Вторая задача:

var city = 'Нижний Новгород'; //поиск города
$(xml).find('struct member:contains("USER_CITY") string:contains("' + city + '")').each( function( i, val ) {
  var $val = $( val );
  if( city != $.trim( $val.text() ) ) return;
  
  var struct = $val.closest('struct');
  var userName = struct.find('member:contains("USER_USERNAME") string').text();
  $('.author_city').append(userName);
})