Without your actual data or source, it will be hard for us to diagnose what is going wrong. However, I can make a few suggestions:
Given what you wrote, I suspect whatever converts the database data to XML is broken; it's propagating non-XML characters.
Create some database entries with non-XML characters (NULs, DELs, control characters, et al.) and run your XML converter on it. Output the XML to a file and look at it in a hex editor. If this contains non-XML characters, your converter is broken. Fix it or, if you cannot, create a preprocessor that rejects output with such characters.
If the converter output looks good, the problem is in your XML consumer; it's inserting non-XML characters somewhere. You will have to break your consumption process into separate steps, examine the output at each step, and narrow down what is introducing the bad characters.
Update: I just ran into an example of this myself! What was happening is that the producer was encoding the XML as UTF16 and the consumer was expecting UTF8. Since UTF16 uses 0x00 as the high byte for all ASCII characters and UTF8 doesn't, the consumer was seeing every second byte as a NUL. In my case I could change encoding, but suggested all XML payloads start with a BOM.
~ Answered on 2012-06-14 18:27:00