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I have an ASP.Net application that has some data driven elements powered by XML with some very basic XPath queries. How big can an XML file become e.g. 10MB, 50MB before the application should start to see a dip in performance when reading from the file.

A: 

Load test. Try http://www.clanproductions.com/jblitz/, reasonably priced, decent functionality.

EDIT

I have absolutely NO affiliation with jBlitz. It was introduced to me on a project, and I've used it for load testing ever since because it's simply the best load/stress tester I've used under $100.

kervin
don't spam with advertisement for some product
BurningIce
+1  A: 

Generally it's not a good idea to load or query large files in a web application - especially if multiple users will be doing it. I have seen web applications with poor resource management consume a substantial amount of memory in IIS performing file queries, using anything from 500MB to 1GB of RAM.

As a general rule of thumb I don't like working with any file larger than 10MB.

Damien Dennehy