Премахване на връщане на каретка от XML файл C#

Трябва да премахна връщане на каретка от XML файл, но това, което получавам, е само XML файл с едно поле (\r). Написах това:

    string sourceFileName = textBox1.Text;

                     StreamReader sr = new StreamReader(sourceFileName);

                     String line;
                     String newLine = null;
                     // Read and display lines from the file until the end of 
                     // the file is reached.
                     while ((line = sr.ReadLine()) != null)
                     {

                         //Regex regex = new Regex(@"(\r\n|\r|\n)+");

                         newLine = line.Replace("\r\n", String.Empty);
//also tried line.Replace("\n", String.Empty).Replace("\r",String.Empty); , but no use

                         StreamWriter sw = new StreamWriter(@"C:\Users\manish\Desktop\output.xml");
                         sw.WriteLine(newLine);
                         sw.Close();
    }

Какъв може да е проблема тук.

РЕДАКТИРАНЕ:

Ето примера:

3C 3F 78 6D 6C 20 76 65  72 73 69 6F 6E 3D 27 31
30 27 3F 3E 3C 72 6F 6F  74 3E 20 E0 A8 8D E2 80
80 E3 B0 80 E4 8C 80 E4  A4 80 E4 90 80 E3 B8 80
E7 8C 80 E7 8C 80 E5 BC  80 E6 98 80 E6 B0 80 E3
88 80 E7 94 80 E3 8C 80  E5 BC 80 E6 B8 80 E6 88
80 E5 BC 80 E7 94 80 E3  8C 80 E5 BC 80 E6 8C 80
E3 84 80 E3 80 80 E5 BC  80 E7 8C 80 E3 84 80 E3
B0 80 E2 BC 80 E4 8C 80  E4 A4 80 E4 90 80 E3 B8
80 E2 80 80 E0 B4 80 E0  B4 80 0A 20 3C 62 6F 6F
6B 74 69 74 6C 65 3E 3C  21 5B 43 44 41 54 41 5B
5D 5D 3E 3C 2F 62 6F 6F  6B 74 69 74 6C 65 3E 3C
70 61 6E 65 6C 73 3E E0  A8 8D E3 B0 80 E7 80 80

<?xml version='10'?><root> à¨â€€ã°€äŒ€ä¤€ä€ã¸€çŒ€çŒ€å¼€æ˜€æ°€ãˆ€ç”€ãŒ€å¼€æ¸€æˆ€å¼€ç”€ãŒ€å¼€æŒ€ã„€ã€€å¼€çŒ€ã„€ã°€â¼€äŒ€ä¤€ä€ã¸€â€€à´€à´€
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Изглежда страшно..ха!!