weapons.xtbl - base settings for all weapons
weapon_upgrades.xtbl - all level ups for weapons (That's how it was in SR3).
Note: Change the NPC damage and not the player damage
NPC damage = how much damage the NPC's take.
Player damage = how much damage you take...
example
<Damage_Max>
<NPC_Damage>****</NPC_Damage>
<Player_Damage>****</Player_Damage>
</Damage_Max>
Where the *'s are is what you would want to change (lower on player damage and higher on npc).