It likely works with the release version of R because C++11 is now used as the default version of the C++ compiler on newer versions of R. On older versions you have to opt-into this support. The xml2 package itself doesn't require C++11, but some newer versions of the libxml2 headers do require it, which may be why you are running into problems.
You might want to update to use a newer workflow file. Your workflow is still querying using the system dependencies from R-hub, newer versions of remotes instead query the RStudio Package Manager for system dependencies. It could be that there is an issue there that is causing the problem.
If you run usethis::use_github_actions() it will overwrite your old workflow, then you can look at the git diffs and transfer over your changes to the new workflow.
Just for my own understanding, you think the reason it used to pass, and then stopped, is because a newer version of libxml2 was released that required C++11, which was not opted into by R 3.5.3?