declare @temptabnew table (id int, name varchar(50), datestarted datetime)
declare @temptabold table (id int, name varchar(50), datestarted datetime)

insert into @temptabnew values (1, 'John Smith', '2000-01-01')
insert into @temptabnew values (2, 'Jack Black', '2002-02-01')
insert into @temptabnew values (3, 'Bill Bob', '2005-03-06')
insert into @temptabold values (1, 'John Smith', '2000-01-01')
insert into @temptabold values (2, 'Jack Black', '2002-02-07')
insert into @temptabold values (3, 'Billy Bob', '2005-03-06')

select 
    1 as [tag]
   ,0 as [parent]
   ,NULL as [PeopleTable!1!root]
   ,NULL as [Person!2!ID]
   ,NULL as [Person!2!Name!ELEMENT]
   ,NULL as [Person!2!Name_Changed!ELEMENT]
   ,NULL as [Person!2!DateStarted!ELEMENT]
   ,NULL as [Person!2!DateStarted_Changed!ELEMENT]
UNION
select 
    2 as [tag]
   ,1 as [parent]
   ,NULL as [PeopleTable!1!root]
   ,newtab.id as [Person!2!ID]
   ,newtab.name as [Person!2!Name!ELEMENT]
   ,case when newtab.name = oldtab.name then 'N' else 'Y' end as [Person!2!Name_Changed!ELEMENT]
   ,newtab.datestarted as [Person!2!DateStarted!ELEMENT]
   ,case when newtab.datestarted = oldtab.datestarted then 'N' else 'Y' end as [Person!2!DateStarted_Changed!ELEMENT]
from @temptabnew newtab
    join @temptabold oldtab
        on newtab.id = oldtab.id
FOR XML EXPLICIT

<PeopleTable>
  <Person ID="1">
    <Name>John Smith</Name>
    <Name_Changed>N</Name_Changed>
    <DateStarted>2000-01-01T00:00:00</DateStarted>
    <DateStarted_Changed>N</DateStarted_Changed>
  </Person>
  <Person ID="2">
    <Name>Jack Black</Name>
    <Name_Changed>N</Name_Changed>
    <DateStarted>2002-02-01T00:00:00</DateStarted>
    <DateStarted_Changed>Y</DateStarted_Changed>
  </Person>
  <Person ID="3">
    <Name>Bill Bob</Name>
    <Name_Changed>Y</Name_Changed>
    <DateStarted>2005-03-06T00:00:00</DateStarted>
    <DateStarted_Changed>N</DateStarted_Changed>
  </Person>
</PeopleTable>

<PeopleTable>
  <Person ID="1">
    <Name Changed="N">John Smith</Name>
    <DateStarted Changed="N">2000-01-01T00:00:00</DateStarted>
  </Person>
  <Person ID="2">
    <Name Changed="N">Jack Black</Name>
    <DateStarted Changed="Y">2002-02-01T00:00:00</DateStarted>
  </Person>
  <Person ID="3">
    <Name Changed="Y">Bill Bob</Name>
    <DateStarted Changed="N">2005-03-06T00:00:00</DateStarted>
  </Person>
</PeopleTable>

declare @temptabnew table (id int, name varchar(50), datestarted datetime)
declare @temptabold table (id int, name varchar(50), datestarted datetime)

insert into @temptabnew values (1, 'John Smith', '2000-01-01')
insert into @temptabnew values (2, 'Jack Black', '2002-02-01')
insert into @temptabnew values (3, 'Bill Bob', '2005-03-06')
insert into @temptabold values (1, 'John Smith', '2000-01-01')
insert into @temptabold values (2, 'Jack Black', '2002-02-07')
insert into @temptabold values (3, 'Billy Bob', '2005-03-06')


select 
    1 as [tag]
   ,0 as [parent]
   ,NULL as [PeopleTable!1!root]
   ,NULL as [Person!2!ID]
   ,NULL as [Name!3!!ELEMENT]
   ,NULL as [Name!3!Changed]  
   ,NULL as [DateStarted!4!!ELEMENT]
   ,NULL as [DateStarted!4!Changed]  
UNION
select 
    2 as [tag]
   ,1 as [parent]
   ,NULL 
   ,newtab.id 
   ,NULL 
   ,NULL 
   ,NULL
   ,NULL
from @temptabnew newtab
    join @temptabold oldtab
        on newtab.id = oldtab.id
UNION
select 
    3 as [tag]
   ,2 as [parent]
   ,NULL 
   ,newtab.id 
   ,newtab.name 
   ,case when newtab.name = oldtab.name then 'N' else 'Y' end 
   ,NULL
   ,NULL
from @temptabnew newtab
    join @temptabold oldtab
        on newtab.id = oldtab.id
UNION
select 
    4 as [tag]
   ,2 as [parent]
   ,NULL 
   ,newtab.id 
   ,newtab.name 
   ,case when newtab.name = oldtab.name then 'N' else 'Y' end 
   ,newtab.datestarted 
   ,case when newtab.datestarted = oldtab.datestarted then 'N' else 'Y' end 
from @temptabnew newtab
    join @temptabold oldtab
        on newtab.id = oldtab.id        
order by
	[Person!2!ID]
	,[Name!3!!ELEMENT]
	,[Name!3!Changed]	
	,[DateStarted!4!!ELEMENT]
	,[DateStarted!4!Changed] 	
FOR XML EXPLICIT

--other way
Select
	(
	Select
		[@ID] = newtab.ID
		, (select [@Changed] = case when newtab.name = oldtab.name then 'N' else 'Y' end, newtab.Name [*] For Xml Path('Name'), Type )
		, (select [@Changed] = case when newtab.DateStarted = oldtab.DateStarted then 'N' else 'Y' end, newtab.DateStarted [*] For Xml Path('DateStarted'), Type )
	From	
		@temptabnew newtab
	join @temptabold oldtab
			on newtab.id = oldtab.id     
	For Xml Path('Person'), Type )
For Xml Path('PeopleTable'), Type