How can I convert the .txt files to xml document? Are there any reliable softwares available, or can I do it with the help of Java?

Windows .txt files are files that contain human readable ascii text. There is no further structure to it. XML files are also human readable but reflect natural structure in the file's data. Unfortunately, there is no magic. You need to understand the format of the data in your text files, define a DTD to reflect that structure and then represent the data in your .txt files in XML.