Looked long and hard at it with the developer, and for the first few minutes thought that was the fix. But it wasn't.
We did some more digging and testing. Now I don't even think the error message we are receiving is accurate. The error is happening when we load the xml document into the xml parser via the asp code. That's failing and ultimately we receive the utf-16 not supported message. But, when we manually load a known utf-16 document, that portion works.
So something is preventing the problem xml document from being loaded. The entirely-MS system is telling is it's because utf-16 is not supported, but that's not the real reason.
I have to put this down a few days because we have a release coming out.
Thanks for the help,
Brian Bronson