First - whether the charmed creature "Deserves" a share of the XP is irrelevant. The Red Dragon will likely not be adventuring with the party after the Charm Monster wears off (or even earlier if he attacks a different party member and we are forced to fight him), so any XP he gains is not going to have a bearing on the campaign in any way.
Secondly, we are playing a published campaign that the DM described as "I feel that some of these adventures are quite difficult - feel free to optimize your characters." at the beginning of the campaign. There will be no "catch up" adventures if the party falls behind on XP - and it's safe to say the Dragon will not be joining the party permanently. I question the survivability of the characters should their XP be gimped by 20% (or more - depending if the Beguiler continues charming creatures). I assume the campaign adventures were written assuming the Players would recieve all the XP, or at least share it with a permanent NPC (so that XP would still benifit the party in adventures to come).
Thirdly, I am in full support of an NPC joining the group earning a full share of XP. They should also earn a full share of loot.
However, the circumstances are different in this case for a number of reasons:
a) This creature is only helpful to the Beguiler in the group - the rest of the party are still facing an attitude of Hostile from a CE monster. The only character that is safe from this creature at present is our Beguiler, however a full share of party XP will reduce XP earned from all party members - including the ones that must be prepared for the inevitable clash between the rest of the party and this dragon.
b) NPC's that could be trusted were available in this campaign and turned down by a consensus of the players. In this case the Beguiler has been using the Dragon as his personal pet, largely to the unnease of the rest of the party. Plans are already in play to kill this Dragon ASAP.
c) The Player (Kor) who is playing the Beguiler has invested more into the ability to Charm monsters than anything else in his entire character. His Feats, Skills, Attributes, and Loot have all been invested in allowing the Charm, increasing the Charm DC, allowing the Dipomacy to work with charm etc. If the Monster is just going to replace a NPC the party could have simply allowed to come along - was there any point to all that investment?
d) The Dragon is only under control via a Charm Monster spell. One well-placed Dispel Magic will have the party completely hosed. (Part of the reason the rest of the party is discussing the hasty demise of said dragon). This is not a situation that is normally a concern for an NPC joining a party.
Kor pointed out this thread to me via email and I thought I should point out that there is much more to the argument that the Dragon should not recieve a full share of Party XP than "XP greed"