This was happening to me as previously posted. Out of some 40 odd photos, about 5 wouldn't load. After reading th lst fellas post about typing the xml back in bbedit, i tried it with Transmit and it worked.
Must be this very vague "Unix style line endings issue" that breaks .htaccess files when you edit them in Dreamweaver. Apparenly the line endings get converted to "Mac style".
If anyone knows anything about this I'd love to hear it.