InfoPath Dev

 Infopath is displayed as xml in IE when I try to open a infopath link from sharepoint site. This is not happenning on all the computers. 

The xml docuement does contain the progid  Document.Infopath.

 I can save it to desktop and open with Infopath.

The simple reason is that the computer doesn't have InfoPath installed on it or the installation is corrupt. Try repairing Office and verify that InfoPath can open from the Start button.

 The form is opening in IE as xml when I click the link. It is not recognizing that xml form as InfoPath.

But if you just double click the xml file that you have locally, does it open with InfoPath? Or in IE as xml?

I think you may need to reassociate xml files to open with IP. You can do this by opening InfoPath, then, under Tools / Options, select the checkbox under Microsoft Office under the General  tab that tells IP to check to see if it is set as the default xml editor. The next time you open an xml file, you should be prompted to set IP as your default editor....