I have a Schema element node as below
This StackOverflow question seems to be a good fit for your problem.
In a nutshell, the hexadecimal character 0x19 is invalid in XML (see the Xml spec at http://www.w3.org/TR/REC-xml/#charsets), hence the error. You will therefore need to remove it from your input message - or ask the system generating the message to remove the character.
To see which character is causing the actual problem (0x19 is the 'em' system character and might not present itself), view the offending file in a Hex Viewer which you can grab online.
If the Xml is being generated from a flat-file schema, you might want to consider stripping the offending character from the input flat-file message in the Decode stage of a Receive Pipeline before the Flat-File Disassembler parses the message.