encoded into UTF-8 -> You must provide a WXR file?

Under known issues in the README file for the module it says:

Known issues:
- Blog must be encoded into UTF-8

Pointing the WordPress Import form at the file produced the error "You must provide a WXR file." I was able to open the export file from WordPress 2.3.1 -> wordpress.2008-05-10.xml and resave it in UTF-8 format which also contains <?xml version="1.0" encoding="UTF-8"?> at the top of the file.

The problem persists with the error message "You must provide a WXR file." Please advise.