I am getting this in my logs (before a bunch of connection errors due to the dtsconfig not loading):
Warning: 2009-12-01 11:14:09.81
Description: The configuration file loaded, but is not valid. The file is not formatted correctly, may be missing an element, or may be damaged.
This configuration file is *fine* and I have loaded it a hunnered times. The problem is that SSIS is lying and it did not load the file at all: This was caused, in my case, by a permissions problem. A minor snafu changed the permissions on my dtsconfig & my SQL Server ##xp_cmdshell_proxy_account## lost permissions on it.
So this actually indicated that the SSIS package has permissions on the parent folder & can thus see that the file exists, but it does not have permissions to read the actual file. I suspect that you would get the same results if you had an empty dtsconfig.
I have spent the bulk of two days trying to tweak the contents of my dtsconfigs for no reason - and eventually it worked! But it was because all the mucking with my dtsconfigs lead me to unknowingly recreate the file with the correct permissions.