I'm going to guess that you edited the GalCiv3GlobalDefs.xml in the base game.  That will never work.  The game reads pre-compiled data in .bin and .dat files instead of the .xml files.

You need to make a mod.  The Mods folder in your ...Documents\My Games\GC3Crusade folder has a ModdingReadme.txt file that should get you started.  Note that it mentions the My Games\GalCiv3 folder.  That folder was for the original release of just the base game.  That folder is no longer used and was replaced by the GC3Crusade folder when Crusade was released.  The GC3Crusade folder is still being used.

One very important thing to remember is to use the correct version of a file in the mod.  Each expansion can include a newer version of some of the files.  You should check the expansions in the following order:

Retribution
Intrigue
Crusade
Base Game

In your case, Retribution has the newest version of the GalCiv3GlobalDefs.xml file, so you need to use that file.  The versions in the Crusade expansion and the base game need to be ignored.

Once you create and save a custom faction using the mod, you don't need to keep using the mod to use the faction.

Also, don't forget to enable mods.  You need to start the game, select Options at the main menu, select the Gameplay tab, enable mods, click Done, read the note that appears, exit the game, then restart it.