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Is it possible to point to an xml file as a datasource in the same way you would with an .mdf file? Please let me know if I can clarify this question.

For example, let's say I have a datagrid and I want to connect a datasource to it and I want that datasource to be based on a local filesystem xml file.

+1  A: 

You can try using the DataSet.ReadXml method.

The ReadXml method provides a way to read either data only, or both data and schema into a DataSet from an XML document.

astander