There is no Unicode byte order mark. Cannot switch to Unicode

The reality of your file’s encoding appears to conflict with that specified by your XML declaration. If your file actually uses one-byte characters, declaring encoding="utf-16" won’t change it to use two-byte characters, for example.

Try removing the conflicting encoding from the XML declaration. Replace

<?xml version="1.0" encoding="utf-16"?>

with

<?xml version="1.0"?>

You may also be able to load the file into a string as a work-around using LoadXML().

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