Our XC store is both small and simple compared to some of the stores on here, however.... Simple edits of the XC XML Sitemap Module settings achieve our chosen/desired url displays. FWIW:
https://dl.dropboxusercontent.com/u/50440624/Z-Forum/XML%20Sitemap%20-%20General.png
At category level, only the category name is displayed after the domain /
At sub-category level, quite sensibly and logically, only the the category then sub-category names are displayed after the domain /
Once any individual product is selected, only the product name (i.e. seo-friendly name.html) is displayed after the domain /
Just like these alternative (simple) versions of @hartwellj previous post, but all our urls are https:// prefix by default with auto re-direct for http://
http://gospelmusicians.com/pure-synth.html and
http://gospelmusicians.com/pure-synth.html
With this setup, category and sub-category names are never part of a specific product url, but active breadcrumb links are there if people are lost... As @hartwellj has posted, it turns into a longwinded url if any tabs (custom or otherwise) are desired within the reference url, instead of only the default main description tab...so we don't use these
We're a specialised supplier, we're not looking for the
SEO Holy Grail and we don't participate in online advertising (google etc) which will be quite different than the approach taken by others, but this works okay us and these settings are part of a default XC5 install anyway, so can be setup to suit.