A quick fix for XML parsing error Rated 4 out of 5 stars
The error seems to arise because the folderColumn.label entity is not found in the messenger.dtd file.
According to the current state of this file in Mozilla repository, I think folderNameColumn.label is the new name to use (could be linked to the new possibility to have more than the folder names in the folder pane, so now there are more than one column).
Fix in the extension code is to replace the two occurrences of "&folderColumn.label;" at lines 147 and 174 in content/tagbar/settings.xul by "&folderNameColumn.label;"
On my computer, with Thunderbird 38.3, it allows to acces the options for the extension and edit categories.
No solution at the moment for the recording of the tags when sending emails which seems also broken.
Thunderbird tag implementation seems simplistic and unpractical to use tags at their full potential. Tag Toolbar categories and toolbar (obvioulsy) are welcomed additions.