I received this error after carrying out a MS Deploy migration from Windows 2003 (IIS6) to Windows 2008R2 x64 (IIS 7.5).
Download the Microsoft SQLXML 4.0 SP1
Test the problematic website and see if the error has gone if not then do the following:-
Copy Microsoft.Data.SqlXml.dll from one of these locations to the bin folder of your website
32 bit server – C:Program FilesSQLXML 4.0binMicrosoft.Data.SqlXml.dll
64 bit server – C:Program Files (x86)SQLXML 4.0binMicrosoft.Data.SqlXml.dll
Test the website, worked for me!