First off, look at the XML file itself - make sure it exists, and then look at the content. The error message is very specific - it says that the first character in the file if wrong, so at a guess, it isn't a '<' character - it's probably the wrong file. The other possibility is that it's in the wrong place: this could be a permissions issue. It is a poor idea to store any data files in the exe folder unless they are always going to be opened in read only mode - very often, any write access opening will fail security policies in relesae versions, and you will get an error - so it could be how you are opening the file. If you need it to a be read-write file, then move it to a more useful place:
Where should I store my data?[
^] should help