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It sounds to me like this is a format that you print to, from things like Microsoft Word 2007 or higher. It is supposed to be a substitute for PDF. I would suggest obtaining the original Word doc, and saving it as filtered HTML or something more readily transferable.
I've never heard of a program to convert from xps to mobi, probably because xps is so little used, and is a print format, not a text format. It is supposed to be zip'ed XML, so you could try unzipping it and looking at the contents to see how close to something useful the content is.
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