Pidgin 2.7.10 (libpurple 2.7.10) in one of my computers (Ubuntu 10.04) stopped loading my accounts, with the error "Error Reading blist.xml - An error was encountered reading your buddy list. The file has not been loaded, and the old file has been renamed to /home/pradeeban/.purple/blist.xml~." Basically it is unable to find the account, hence asking to configure new user accounts. I found both blist.xml and accounts.xml being corrupted in the .purple folder. The backup files themselves (accounts.xml~ and blist.xml~) were corrupted.
I easily fixed the issue by replacing the corrupted account.xml and blist.xml with the same files from my other computer. This solved the issue. Obviously a smart and stupid fix at the same time! Can't bother fixing it in a professional manner, finding the root cause blah blah blah. During this fix, I also noticed that passwords are saved as plain text in the above two files (oops!). On a side note, I always am fond of reading my previous chat logs from .purple.. haha.. ;)