OK, I kmow to some of you this might be a joke...
the internal content/representation of a XML document is ASCII codes/characters right? so when uploading them you can do in ASCII mode but why does some ftp porogram uploads them in Binary format?
I have never had any problems uploading wiht the AUTO feature turned on.
Its possible that the character set encoding that your XML file uses may be tripping your FTP program's autodetect feature.
Some FTP progs try to detect whether a file is ASCII or binary by checking the file extension. It is quite likely that .xml/.xsl/.xsd/etc. are not extensions it "knows", so it defaults to binary to be safe. There is no harm in this. (don't worry, be happy)