Simplest Sanskrit XeLaTeX file

Input:

\documentclass{article}
\usepackage{polyglossia}
\setmainfont[Script=Devanagari]{Nakula}

\begin{document}
Your Devanāgarī looks like this:  आसीद्राजा नलो नाम and your romanized stuff looks like this: āsīd rājā nalo nāma.  
\end{document}

Output:

You can get the Nakula font (and its twin, Sahadeva) from John Smith's website, http://bombay.indology.info