Valencia 2007 race winner Xaus had used a qualifying tyre to set a record-breaking 1min 34.265secs during day one, keeping him over one-second clear of a field that contained three of the five factory-backed WSBK teams.
Xaus' lap time duly came under sustained attack on day two, when the rest of the field ran soft rubber, but only former World Supersport champion Muggeridge was able to beat the Spaniard.
Karl, who has taken a best race finish of tenth in the two rounds so far held this season, slipped just 0.013secs under Xaus' best, providing the Australian with a welcome boost ahead of the third round of the 2008 series - back at Valencia - on April 6.
"This bike has got a lot of potential," said a delighted Muggeridge. "I didn't go as well in race set-up but for the Spanish round we'll have some new electronic parts so I'm feeling confident. The DF Racing guys are doing a great job and I think we're going to get some good results this season."
In the absence of factory Ducati riders
Troy Bayliss and
Michel Fabrizio - forced to miss the test due to injury, as was Xaus' team-mate Max Biaggi - the final day Ducati attack was left in the hands of
Lorenzo Lanzi, who was quickest for much of the day.
Lanzi, now riding for the satellite RG Team after losing his factory seat at the end of last year, was eventually nudged back to third - just 0.136secs from Muggeridge and 0.123secs from Xaus - suggesting that the new 1098 is well suited to the twisty Spanish circuit.
"We sorted out the problems that slowed us at Phillip Island", said Lanzi, "and now we've got an improved engine I can be up there with the other guys."
The Italian was followed on the timesheets by the Ten Kate Hondas of Spain's
Carlos Checa and Japan's
Ryuichi Kiyonari. Former
MotoGP star Checa was just a tenth behind Lanzi, with reigning double BSB champion Kiyonari a further 0.335secs back.
