you can remove that line all-together if you can find it. Its not needed.

Yup. I had the same problem. Deleting the following line in all files within the xmlsrv folder (except for xmlrpc.php) took care of the problem for me:

echo '<?xml version="1.0" encoding="utf-8"?'.'>';

Edit: The exception seems to be the Atom feed.

Please forgive the double posting, but I noticed [url=http://forums.b2evolution.net/viewtopic.php?t=6895]a thread that talks of blank spaces on the RSS feeds[/url] posted to the 0.9x bugs forum. It seems relevant, as I think that's what causes the error mentioned above.[/url]

I found a solution for my feeds. Have you checked the end of conf/_config.php [url=http://forums.b2evolution.net/viewtopic.php?t=6484]to be sure there are no line breaks[/url]? I had a similar problem and deleting all lines at the end of _config.php fixed it.