The reason you can't use this is basically because it is not implemented for the xsens...
And of course it was really meant for IMUs that just output imu measurement data and not for a device like the xsens that already outputs a full navigation solution.
You could use BODY_TO_IMU if you just get get the IMU data from the xsens (like <subsystem name="imu" value="xsens"/> and then run paparazzi's own AHRS/INS algorithms on that "raw" data, but honestly why would you buy an xsens then?
Of course it is possible to add handling of BODY_TO_IMU to the xsens driver, you "just" have to carefully rotate _all_ relevant outputs of the xsens: attitude, angular rate, acceleration, velocity (and inputs like the GPS lever arm if you use that).
So if you simply want to mount the xsens in body frame (with x-forward, like all BODY_TO_IMU to zero), the easiest way is probably to configure the xsens (from the driver) to output the attitude in NED so it matches the standard aviation body frame. (ENU is often used for ground based systems...)