This SO answer says "The Flash Player now looks for a policy file on port 843".. I have a policy server that is listening on port 843 which sends out an XML policy to Flash clients. Is this enough? What is the "xmlsocket://" protocol? Is it just a way to tell Flash player that we're talking about sockets when using the loadPolicyFile() method?
As I understand it there are two different types of policy files, cross domain policies for loading data from an external domain and policy files regarding socket connections. Both policy files are quite similar in that they both use a similar structured XML data structure.
I believe that the xmlsocket:// protocol is merely a pseudo protocol in that it instructs the Security.loadPolicyFile method to load a policy regarding sockets rather than a cross domain policy for accessing external data.
More information can be found on this Livedoc page.