It turns out this was not an xmlread issue, and has nothing to do with AllowDoc, but instead is due to a problem with the XML file. Here is info in case it helps someone.
The XML file contains international place names, so there are non-English characters which appear as question marks and seem to mess up adjacent field closings. For example it crashes on this line
<field name="geocity">Matar?/field>
for Mataró (in Spain) but not if it is manually edited to
<field name="geocity">Mataro</field>
Incidentally a good way to find problem lines in an XML file is to open it in a web browser, which will tell you which line it couldn't read (if you have a long XML file scroll to the top once it's opened in the browser to see the error message).
I will mention that the first line of the XML file does not specify the encoding, which I believe can cause problems with non-English characters, but I was never able to find an encoding choice that eliminated the errors,
<?xml version="1.0"?>
