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We are currently displaying the data in the grid using the following method call mygrid.loadXML("../filename.xml" ...

We are currently displaying the data in the grid using the following method call
mygrid.loadXML("../filename.xml");
This xml file is created at the server side and the client picks it up.Getting Error type:LoadXML Descrption:IncorrectXML,this error is getting displayed while its tested on link but not while its run in local machine.
Any clues?

If you loading from static XML file - it can be caused by some timing issue ( xml file not created on moment of data loading )
In case of loading from dyn. data source - problem can be caused by incorrect content type or whitespaces before <?xml declaration

Please check 
http://dhtmlx.com/docs/products/dhtmlxGrid/doc/articles/Common_Problems_in_Grid.html#grid_art_comprob