Are you sure the problem is with the column collation and not the XML encoding? I have experienced XML imports from people who banged a bunch of text together and added encoding="UTF-8" to the XML prolog as though it was some kind of magic incantation. They neglected to actually apply UTF-8 encoding to the accented characters.

Try just doing a SELECT from the XML data and see if you get the error. If so, the error is in the XML.

If the error does not occur until you try to INSERT, then the target column collation is really the issue. (And no, I don't know what collation to suggest.)