XML Error: There are multiple root elements

You need to enclose your <parent> elements in a surrounding element as XML Documents can have only one root node:

<parents> <!-- I've added this tag -->
    <parent>
        <child>
            Text
        </child>
    </parent>
    <parent>
        <child>
            <grandchild>
                Text
            </grandchild>
            <grandchild>
                Text
            </grandchild>
        </child>
        <child>
            Text
        </child>
    </parent>
</parents> <!-- I've added this tag -->

As you're receiving this markup from somewhere else, rather than generating it yourself, you may have to do this yourself by treating the response as a string and wrapping it with appropriate tags, prior to attempting to parse it as XML.

So, you've a couple of choices:

1. Get the provider of the web service to return you actual XML that has one root node
2. Pre-process the XML, as I've suggested above, to add a root node
3. Pre-process the XML to split it into multiple chunks (i.e. one for each <parent> node) and process each as a distinct XML Document

You can do it without modifying the XML stream: Tell the XmlReader to not be so picky. Setting the XmlReaderSettings.ConformanceLevel to ConformanceLevel.Fragment will let the parser ignore the fact that there is no root node.

        XmlReaderSettings settings = new XmlReaderSettings();
        settings.ConformanceLevel = ConformanceLevel.Fragment;
        using (XmlReader reader = XmlReader.Create(tr,settings))
        {
             ...
        }

Now you can parse something like this (which is an real time XML stream, where it is impossible to wrap with a node).

<event>
  <timeStamp>1354902435238</timeStamp>
  <eventId>7073822</eventId>
</event>
<data>
  <time>1354902435341</time>
  <payload type='80'>7d1300786a0000000bf9458b0518000000000000000000000000000000000c0c030306001b</payload>
</data>
<data>
  <time>1354902435345</time>
  <payload type='80'>fd1260780912ff3028fea5ffc0387d640fa550f40fbdf7afffe001fff8200fff00f0bf0e000042201421100224ff40312300111400004f000000e0c0fbd1e0000f10e0fccc2ff0000f0fe00f00f0eed00f11e10d010021420401</payload>
</data>
<data>
  <time>1354902435347</time>
  <payload type='80'>fd126078ad11fc4015fefdf5b042ff1010223500000000000000003007ff00f20e0f01000e0000dc0f01000f000000000000004f000000f104ff001000210f000013010000c6da000000680ffa807800200000000d00c0f0</payload>
</data>

Wrap the xml in another element

<wrapper>
<parent>
    <child>
        Text
    </child>
</parent>
<parent>
    <child>
        <grandchild>
            Text
        </grandchild>
        <grandchild>
            Text
        </grandchild>
    </child>
    <child>
        Text
    </child>
</parent>
</wrapper>