My tought:
If your working at a company and they want an application for internal use only. If some people want to option and others not then sure, create a setting in the .config set at true or false. You don't need two different project, in the form Load event, set the menu item to True/False.
If it's a commercial application and you don't want some knowledgebal user to go in the .config file and change this setting, then I suggest you use the #const #if pre-processor instruction and compile the code differently depending on the one you want, still you don't need two different project.
If the forms are completely different or if the changes are so major that the layout has to be changed significaly then you have no choice but to create two different UI.
I would'nt use a seperate xml as the .config can do the job. I would'nt create two different UI unless I really need two cause it can be trouble to update two things.