Ok, now I had the error too so, it wasn't enough to save the file in UTF-8, it was the BOM ( Byte Order Mark ), which are the first 3 bytes that you don't see if you open it with Notepad, for example.
So yes, this case of an UTF-8 file with a BOM at the start, but with an header that says "Windows-1252", which means ANSI, is what makes the MS XML parser we use for the installer to complain with an error. And rightly so, I'd say...that XML file is basically lying about itself...
I cannot see any reason why the Active Sky Next program would need to change the encoding of the file to UTF-8 (and why when launching the program, the XML file should only be used by installers ), because I cannot see the need to use non-Latin characters in their pathnames or product names in the file.
But even if they *had* a good reason to do so, they SHOULD have changed the header too.
If you change the header, and REMOVE the encoding="windows-1252" parameter, it WORKS with the Addon Manager installer, because when there's no encoding specified, the default is UTF-8 so, the file is not lying about itself anymore...and the Addon Manager installer correctly deals with this. Well, it's not really "dealing" with it, it's just letting the official MS XML parser to do its job, and report of any errors when they are found.
So, this concludes the whole issue, to confirm the problem is caused by Active Sky Next, which changes the file encoding of the FSX XML files from their default to UTF-8, without properly updating the XML header to reflect the change.