So after decryption what i get is key value(it is not text they are some octets).
And this is *not* an XML! Check the xml spec, it does not allow arbitrary binary data in xml file. Thus, xmlsec correctly complains when you try to use "Content" type for octets.
2) If i tell the parser about those Ids on my own,
then when the xmlsec will read the EncryptedKey or EncryptedData for decryption, it will also try to
register them, libxml2 would or should flash an error
in that case.
Not sure I understand this. If you register these ID attibutes in libxml2 using DTD, schema or manualy then xmlsec will just do nothing. I don't think anyone should/would complain in this case.
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