I wasn\'t aware of a difference, but a coworker says there is, although he can\'t back it up. What\'s the difference if any?
As others have said, well-formed XML conforms to the XML spec, and valid XML conforms to a given schema.
Another way to put it is that well-formed XML is lexically correct (it can be parsed), while valid XML is grammatically correct (it can be matched to a known vocabulary and grammar).
An XML document cannot be valid until it is well-formed. All XML documents are held to the same standard for well-formedness (an RFC put out by the W3). One XML document can be valid against some schemas, and invalid against others. There are a number of schema languages, many of which are themselves XML-based.