I was having problems with my ajax lookups when the database fields returned weird characters like the copyright symbol. The responseXML would be blank. After many searches I found you need to output in utf-8 and add an xml declaration to the output that says it is utf-8. Here is the code below in vb.net for asp.net v1.1
Private Sub OutputDataSetAsXML(ByRef dsSource As System.Data.DataSet)
Dim xmlDoc As System.Xml.XmlDataDocument
Dim xmlDec As System.Xml.XmlDeclaration
Dim xmlWriter As System.Xml.XmlWriter
' setup response
Me.Response.ContentType = "text/xml"
Me.Response.Charset = "utf-8"
xmlWriter = New System.Xml.XmlTextWriter(Me.Response.OutputStream, System.Text.Encoding.UTF8)
' create xml data document with xml declaration
xmlDoc = New System.Xml.XmlDataDocument(dsSource)
xmlDoc.DataSet.EnforceConstraints = False
xmlDec = xmlDoc.CreateXmlDeclaration("1.0", "UTF-8", Nothing)
' write xml document to response