See also http://bugs.debian.org/737721 and http://standards.freedesktop.org/desktop-entry-spec/desktop-entry-spec-latest.html#exec-variables for more background information about this bug report.
I created a desktop file for xarchiver and added the %U parameter to the Exec field
This enables the "open with" menus in various file managers and it works well with Thunar and Nautilus. However in pcmanfm and spacefm it does not. The developer of pcmanfm insists that xarchiver is buggy in this regard because it doesn't implement the full freedesktop spec and can't open file URLs such as file:///home/bill/myarchive.tar.gz
The freedesktop spec permits the use of file URLs or simple file paths if the file is local. Obviously xarchiver can handle the latter if those files are passed to it but is unable to open file URLs. I would be glad, if xarchiver understood these URLs too.