That file doesn’t look terribly like XML to me.   Nevertheless, what about the <?XML ... line at the very top?   Does it include an encoding= clause?

e.g.:   <?xml version="1.0" encoding="UTF-16" standalone="no"?>

It certainly appears that the file does contain UTF ... but does the file declare, in its header, that it does?   If it does not, then that erroneous omission certainly could fool many XML parsers.