javirsantos (9/30/2016)
I set up a test environment with S2 CU1 patch level and gives the same error, deadlock.
There's a strong relationship between transaction duration and deadlock occurrence. Speeding up your transaction will reduce the likelihood of a deadlock.
Check that the permanent table has an index which will support the update, and consider resolving the xml into a #temp table or @table variable as a separate step.
Posting an actual (as opposed to estimated) execution plan as a .sqlplan attachment will assist folks in tuning the query.
For fast, accurate and documented assistance in answering your questions, please read this article.
Understanding and using APPLY, (I) and (II) Paul White
Hidden RBAR: Triangular Joins / The "Numbers" or "Tally" Table: What it is and how it replaces a loop Jeff Moden