This error can be due to the XML that the XMLTextReader is trying to parse not being valid, either the text is not valid XML or it is just a blank string.
Web Designer is looking for a file ending with '_Preferences.xml'.
If it doesn't exist there should be no issue, however if it does exist, the document will attempt to be parsed through an XML parser.
The application checks a path such as: C:\Users\Administrator\AppData\Local\Temp\AETemp (replace Administrator with your account).
In this path will be a file similar to: "WIN-HPDI3OG9H72__SQLLABINSTANCE__DellOneIdentityManagement_Preferences.xml".