xml.LoadData - Data at the root level is invalid. Line 1, position 1

Use Load() method instead, it will solve the problem. See more

The hidden character is probably BOM. The explanation to the problem and the solution can be found here, credits to James Schubert, based on an answer by James Brankin found here.

Though the previous answer does remove the hidden character, it also removes the whole first line. The more precise version would be:

string _byteOrderMarkUtf8 = Encoding.UTF8.GetString(Encoding.UTF8.GetPreamble());
if (xml.StartsWith(_byteOrderMarkUtf8))
{
    xml = xml.Remove(0, _byteOrderMarkUtf8.Length);
}

I encountered this problem when fetching an XSLT file from Azure blob and loading it into an XslCompiledTransform object. On my machine the file looked just fine, but after uploading it as a blob and fetching it back, the BOM character was added.

The issue here was that myString had that header line. Either there was some hidden character at the beginning of the first line or the line itself was causing the error. I sliced off the first line like so:

xml.LoadXml(myString.Substring(myString.IndexOf(Environment.NewLine)));

This solved my problem.