Mixing components: 105 and Deore XT
The Deore XT is a mountain bike derailleur and as such has is long cage dérailleur. Long cage dérailleurs can run larger cassettes for a larger gearing range (at the cost of larger jumps between gears).  I don't know what the Shimano product selection was like in 1999, but you can now get Shimano 105 as either long or short cage depending on your set up (see images below). 

As for Deore XT being more "solid" in 1999 we were running 105 short cage derailleurs on downhill bikes with a single front ring, so that we could run shorter chain lengths and have less chain slap.  The 105 derailleurs survived many crashes.  (Speculation/Humour - I personally suspect the shop was smoking some impressive substances, as was often the case with bicycle shop owners in the 90's)

Compatibility Notes

For more technical description you should see a previous bicycle.stackexchange question: 
How to calculate the capacity of a rear derailleur

Short cage - Short cage dérailleur can only take up or let out so much chain slack.  Therefore your gearing setup may require more chain slack than your derailleur can give or take up.  For example on a double front ring (road bike) set up you can't have a rear cassette that has a cog larger than 27. That said, on the right setup the chain slack is tighter and shifting should be more precise.

Long-cage - Long cage dérailleurs can take up or let out much more chain slack due to the longer pulley cage.  You can run a larger array of gears as a result.  The downside is that shifting isn't quite as precise and the chain isn't under as much tension and you are more likely to get chain slap on rougher terrain.

UPDATE: Since posting I have learned that there are now short, medium and long cage derailleurs.  Same basic idea still applies.

Visual Distinction Between Short and Long Cage Derailleurs

To give you a better idea about what a short and long cate derailleur look like I dug up the following images from google.  Your Deore XT will have similar proportions as the Shimano 105 long cage derailleur displayed below.

Short Cage Shimano 105



Long Cage Shimano 105