Please refer following code, i have added closing tags for Component tags:-
string szXML = "<Model>" +
"<Component Id='1'><Color></Color></Component>" +
"<Component Id='2'><Color></Color></Component>" +
"<Component Id='2'><Color></Color></Component>" +
"<Component Id='4'><Color></Color></Component>" +
"<Component Id='5'><Color></Color></Component>" +
"<Component Id='6'><Color></Color></Component>" +
"<Component Id='6'><Color></Color></Component>" +
"<Component Id='8'><Color></Color></Component>" +
"<Component Id='9'><Color></Color></Component>" +
"</Model>";
XmlDocument objDOM = new XmlDocument();
objDOM.LoadXml(szXML);//you can specify file name here
for (int iIndex = 0; iIndex < objDOM.DocumentElement.ChildNodes.Count; iIndex++)
{
objDOM.DocumentElement.ChildNodes[iIndex].Attributes["Id"].Value = (iIndex + 1).ToString();
}
//objDOM.Save(szFileName) //if xml loaded from File