M: is probably RAMdisk, maybe under OS or/and in extended RAM. (I am guessing, never seen XDOS, but I saw M: somewhere else used as RAMdisk, probably in cassetes/turbo tools.)
Not only XDOS makes this strange HATABS writting, some other DOSes do the same, overwritting other entries. We discussed it on AtariArea.
We were going (I did not have roper mood to do this earlier) to write some question about adding possibility to simply refresh H: definition in HATABS. But now It is written already.
We are (I did not check) not sure if H: is always available, even in BASIC, without any DOS. As in Atari800Win.