Index: /CKEditor/trunk/_source/core/xml.js
===================================================================
--- /CKEditor/trunk/_source/core/xml.js	(revision 3550)
+++ /CKEditor/trunk/_source/core/xml.js	(revision 3551)
@@ -40,5 +40,5 @@
 				baseXml.resolveExternals = false;
 				baseXml.validateOnParse = false;
-				baseXml.loadXML( xmlObjectOrData || '' );
+				baseXml.loadXML( (xmlObjectOrData || '').replace(/&nbsp;/g, '\xA0') );
 			}
 		}
