I would like to display the menu item XML Convert to CR/LF to either a toolbar or function key. I see there is an icon associated with the menu item, but do not see it in the customize toolbars area, nor do I see how to add it in the key mapping area.

A key assingment is possible because the command is available in the key mapping configuration dialog. The command name is a little bit strange. The command name is FormatXMLViewer.

Adding the command line to a toolbar should be also possible. But the command is not present in the toolbar customization dialog. So you have to add it manually by editing the text file containing your toolbar configuration. Unfortunately you have not written which version of UltraEdit you use. So I assume you use the currently latest version or any v14.

Press Ctrl+O to open the file open dialog. Copy into the file name edit field following %appdata%\IDMComp\UltraEdit\*.tb? and press key RETURN. You will see the folder which contains normally the INI file uedit32.ini and where also all the toolbar configuration files with file extension tb1 are stored for every environment. Open the *.tb1 file of the environment you currently use and additionally uedit32.tb0. Insert into both files following line wherever you want this command in your toolbar:
Save the toolbar configuration file, exit UltraEdit and restart it. If you have modified the correct toolbar configuration files, you should see the command symbol now in your toolbar.