The production of charged hadrons is studied in μXe and μD interactions at 490 GeV beam energy. The data were taken at the Tevatron at Fermilab with the E665 spectrometer, equipped with a streamer chamber as vertex detector. Differences between the μXe and μD data are explained by cascading of hadrons in the Xe nucleus. The average multiplicity of charged hadrons in μXe scattering is compared to previously published pXe scattering data and is found to be strongly reduced. This is traced back to the low number of 'projectile' collisions in μXe interactions. From a study of the xBj dependence of hadron production in μXe scattering, and by considering events with a large rapidity gap, evidence is found for a significant contribution of diffractive scattering, which is enhanced in the kinematic region where shadowing of the cross section is observed. This result supports recent models in which diffractive scattering and nuclear shadowing are closely related.