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
for Mataró (in Spain) but not if it is manually edited to
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,