This is not a question on how to overcome the \"XML parsing: ... illegal xml character\" error, but about why it is happening? I know tha
The MSDN guidelines says:
SQLXML 4.0 relies upon the limited support for DTDs provided in SQL Server. SQL Server allows for an internal DTD in xml data type data, which can be used to supply default values and to replace entity references with their expanded contents. SQLXML passes the XML data "as is" (including the internal DTD) to the server. You can convert DTDs to XML Schema (XSD) documents using third-party tools, and load the data with inline XSD schemas into the database.