The libraries section of the XML tells the launcher the libraries needed in order to run. In general you should never need to manually add in libraries when using Loaders, other mods/libraries may require libraries. The only such known and used case of that is Liteloader.
If you do need to add in libraries, see the syntax below:
<libraries> <library url="packs/Test/files/libraries/library-2.0.jar" download="server" file="library-2.0" md5="067cd2ab373ba916c62a9b2e5e2eb777" server="net/library/2.0/library-2.0" path="net/library/2.0/library-2.0" /> </libraries>