Yes I have the same problem. In fact, when I submited the sitemap.xml file to Google and Yahoo it was rejected. Also, when the site is crawled, an Error 404 message is returned for the sitemap.xml file generated by the plugin.
My WP blog is located in a subdirectory. and despite the fact that my root directory already has a sitemap.xml file, things seem to suggest that I need a separate sitemap for the WP blog, hence the effort to set one up.
I have tried creating a robots.txt file to the WP subdirectory but that breaks the sitemap.xml file that the plugin generated.
I've tried adding the URL of the sitemap.xml file that the plugin generated to the robots.txt file in root directory but that file seems to ignore the added URL.
I've tried adding the URL of the sitemap.xml file that the plugin generated to the sitemap.xml file in the root directory but again it seem to be ignored.
I have also tried to add a .htaccess.txt file to the root directory of my site but apparently I do not have permission to do that. (Boo Yahoo.)
I've submited the blog's RSS/Atom feeds to Google as a sitemap but it was rejected.
Using the PS Auto Sitemap plugin I've set up an HTLM sitemap page on the blog and submitted its URL to Google but it's been rejected too.
I'm out of ideas. Any help would be much appreciated.