Problem in validating XML-files

Hi !!

I have build some pages in XML and tried to validate them. But since
they are in german (iso-8859-1 encoding) they are rejected with errors.
Changing the encoding to "windows 1250" everything is ok. But the same
files are validated as ok with the wdg-validator .... This behavior is
really mysterious. And I'm very confused. What can I do ????

References: http://de.geocities.com/shemale41/euro/navigation.xml . 

Beside this I have only som trouble with CSS, but I'm not done with all
possibilities. But any help would be fine. The problems are overflow &
clipping & scrolling when the page is wider then the screen, then the
backgound-image doesn't show up.

Best regards

J. Meier from Bremen @ Germany