I have an install of Joomla 2.5.3. When I create a new article, the default STATUS field is set to "TRASHED".
Now I know that the ARTICLE.XML controls this, however it is not working. It does not matter what I set the default attribute to within the XML, it still remains as TRASHED.
I cannot find where in the code that this is getting generated.
Can anyone shed some light on this?
I've just installed a clean 2.5.3 copy and I cannot reproduce your problem.
I advise you to either:
If in either case you want to preserve your content, you can use Akeeba Backup.