Yes. In the Lib project there is a folder schema, and in that folder we've got bob.xml, set to always copy. In MSBuild this results in the Debug directory looking like:
\Debug
lib.dll
lib.pdb
etc...
\Schema\
bob.xml
The rational behind this was that we're eventually going to have bob1.xml, and bob2.xml, and just stick 'em in a folder so they don't get in the way.
In MSTest, when we reference the Lib project, we get the same folder structure in it's Debug directory, so the test runs fine.