You say the machines are similar (but not identical), so you might want to check whether you're using the exact same libraries/versions. Just as an idea, XML::Simple can work with either XML::Parser or XML::SAX (which in turn can use different SAX parsers). Also, XML::Parser would depend on expat, of which you might have different versions. (ldd and strace are your friends here, if you can't find out otherwise...)

Another thing to check is whether LWP::Simple is actually fetching the same XML. Maybe, for some reason, it's sending a different Accept-Charset: header along with the request, which the server honors by returning a different encoding (I wouldn't know why exactly... but who knows). Just dump and compare the contents of your $html variable. If they're identical, you've narrowed things down to some later processing step... Well, you get the idea.