You need to apply a root node to the XML, force it into XML datatype and then select out the text from the root node....like this:

declare @Table1 table (EmailAddress varchar(20), Msg varchar(20))

insert @Table1

select 'email1','blue'

union select 'email2','black'

union select 'email1','&white'

union select 'email1','<orange'

union select 'email4','red'

select e.EmailAddress as Email

,stuff((select ',' + t.Msg

from @Table1 t where t.EmailAddress = e.EmailAddress

for xml path(''),root('a'),type).value('(a/text())[1]','varchar(4000)'),1,1,'') as MessageBody

from @Table1 e

group by e.EmailAddress

The change is this line:

for xml path(''),root('a'),type).value('(a/text())[1]','varchar(4000)'),1,1,'') as MessageBody

Where I added

,root('a'),type to the FOR XML PATH('')

and

.value('(a/text())[1]','varchar(4000)') to pull the text out again...