The System.Security.Cryptography.Xml.XmlDsigC14NTransform class should do
the trick. See
for an example.
If all you want is a stand-alone hash value,
System.Security.Cryptography.SHA1Managed is probably your best bet.
Perhaps System.Convert.ToBase64String or
System.XML.XmlTextWriter.WriteBase64, depending on what binary data you want
to encode and how you want to perform the encoding.
BTW, if what your overall target is to generate signed XML, you might want
to take a look at the System.Security.Cryptography.Xml.SignedXml class.