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In XMLSchema.dtd, the declaration for restriction must allow both the content allowed by restriction in a complex type and the content allowed by restriction in a simple type. The DTD version needs to be updated to reflect the addition of the 'openContent' element. Other declarations may also need update; I haven't looked. This was raised some time ago on xmlschema-dev but we appear not to have opened an issue for it, and we appear not to have fixed the problem. (If we did fix it, or we have figured out that there is no problem, and I've overlooked the fact, this issue can be closed without further work.) The relevant schemadev thread is the one including the message http://lists.w3.org/Archives/Public/xmlschema-dev/2009Jul/0014.html from Roger Costello.
The required change is in the Structures spec: change <!-- This is used in part2 --> <!ENTITY % restriction1 '((%mgs; | %group;)?)'> to <!-- This is used in part2 --> <!ENTITY % restriction1 '(%openContent;, (%mgs; | %group;)?)'>
The change mentioned in comment 1 has now been integrated into the member-only status-quo documents at http://www.w3.org/XML/Group/2004/06/xmlschema-1/structures.html http://www.w3.org/XML/Group/2004/06/xmlschema-1/structures.diff-wd.html http://www.w3.org/XML/Group/2004/06/xmlschema-1/structures.diff-1.0.html (There was some confusion or complication; it was supposed to have been integrated some time ago, but hadn't been. I've now done it, and checked it.) So I'm marking this as resolved.