Additional info: I was able to convert the same mp3 file to AAC using an application called Mediahuman Audio Converter. I uninstalled, rebooted my macbook and reinstalled XLD ( same version). No change in the decode error.
Mp3 Conversion: Error has occured in the decoder
That is odd. Did you restart XLD after you unzipped the .bundle file into the plugins folder? I just did it and XLD recognized the AAC files.