I have created an HTTP Poll operation using ES XML adapter.
Now that I receive the byte stream which is byte, which contains XML document, how do I Parse that Byte stream using ParseXML config op or do I have to use one of the standard parsers like xerces in a custom step method?
You just need to create a ParseXML operation whose input is the byte. You will need a DTD or XSD which defines the structure of the incoming XML payload. You do not have to specify your own parser. I believe the XML Adapter uses Xerces under the convers, but this is all abstracted away for you.