I have been testing my API calls with a test account and everything seemed to be working well.
I switched over to a "live" account and I getting a 400 error when I pass:
- <entry xmlns="http://www.w3.org/2005/Atom">
I tried taking your XML and posting it to my own account, changing the list to my own list, and it successfully created the contact.
What URI are you posting this XML to? Also, are you sure you have a list 26? Please keep in mind that the list ID is not the same as the Sort order number from the User Interface when looking at a list.
If you have any questions please let me know.
I apologize for the confusion, usually the best way to find the list ID would be to do an API GET call on the lists URI, and you will find your list there.