Take this XLS file
I then save this XLS file as CSV and then open it up w
Conclusion:
Just like the error message says in your update...
The flat file parser does not support embedding text qualifiers in data. Parsing columns that contain data with text qualifiers will fail at run time.
Confirmed bug in Microsoft Connect. I encourage everyone reading this to click on this aforementioned link and place your vote to have them fix this stinker. This is in the top 10 of the most egregious bugs I have encountered.