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I have a memory from the past where my XML didn't appear to be being handled correctly by a client's browser. It turned out that I needed the following :-
Perhaps if you posted an example of the data being sent and the way in which the response is provided, response.write/contenttype etc. someone might have a better solution.
Never used data-islands myself as they're IE specific, decided to write my own JavaScript XML parser instead as this provided other benefits as well.