Smaller files process Ok

App currently using approx 196MB, 11GB free on server, SQL Express has 1.8GB allocated.

Looks like a Chilkat limitation, I have emailed Chilkat support what they expct the max file sizes to be.

Just had a response form Chilkat

Remember.. Chilkat XML is a DOM parser (not a SAX parser). It's building an in-memory document object model. DOM parsers are not memory efficient for huge XML files with millions of nodes/elements/attributes. I don't think you'll be able to use Chilkat XML with a file that large. You'll need to find a SAX based parsing solution, or just write custom string parsing code directly..