Doing it with style
You've applied and been accepted by Google to add AdSense to your site but, because you are serving your pages correctly as application/xhtml+xml, the ads are failing to display.
Well this is how I did it, based on Making AdSense work with XHTML but a bit simpler.
The fact that you can see the 'ads by Goooooogle' above means that it works.
Google AdSense uses the JavaScript function document.write() for the ads and when XHTML is served as 'application/xhtml+xml', document.write() doesn't work. Also the ads are embedded in an iframe, which is not allowed.
To overcome this I created a separate code snippet which includes the javascript and a little styling, and embeded this in my page using the object tag.
See the article at 456bereastreet for Google's ok on this method.
I have also contacted Google to confirm that this method does not break any rules and have received this reply from James (The Google AdSense Team) 'Your implementation appears to be compliant with our program policies at this time.'
Internet Explorer
If we use the same code for Internet Explorer it will display correctly, BUT the links will open in the object tag NOT as intended in the main browser window.
To get around this I have added one conditional comment style to remove the object from Internet Explorer's display and another conditional comment to place the adsense code directly in the page. These conditional comments are hidden from all other browsers.
<body style="overflow:visible; border:0px; padding:0; margin:0;">
<script type="text/javascript">
<!--
your Adsense parameters here
//-->
</script>
<script type="text/javascript"
src="http://pagead2.googlesyndication.com/pagead/show_ads.js">
</script>
</body>
<div id="ads">
<object data="ads.htm" type="text/html"
width="468" height="60">
</object>
</div>
Change the width and height to suit your selected ad format.
Style the "ads" div as you wish, or simply not use it.
Put this in the <head> </head>
<!--[if lte IE 6]>
<style>
#ads {display:none;}
#adsie {clear:both; text-align:center;
width:750px; margin-top:10px;}
</style>
<![endif]-->
Add this beneath the 'ads' div
<!--[if lte IE 6]>
<div id="adsie">
<script type="text/javascript">
your Adsense parameters here
</script>
<script type="text/javascript"
src="http://pagead2.googlesyndication.com/pagead/show_ads.js">
</script>
</div>
<![endif]-->
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