Moodle in English

I have run into a problem with developing a block.

I am using moodle 1.8 and created a block. The block installs fine, but when I add block to the layout I get this error:

XML Parsing Error: xml declaration not at start of external entity
Location: http://localhost/moodle/index.php
Line Number 2, Column 1:
<?xml version='1.0' encoding='utf-8'?>

No matter what changes I make or corrections I try it continues to do that. Once it is added no one can use moodle until I delete the block references from the database manually.

I copied the step by step Guide to Creating Blocks and made the simplehtml block exactly as stated, same error on that one. If you open the Admin's Modules->blocks page (after installing the block) in a separate window when you add it to the layout, cause the error, and then click delete simplehtml block in the separate window, you get a different XML parsing error (it does successfully remove it, but not from the block instances table)

I tried to grep the moodle code files, and a dump of the database and found no XML or other files that do not have the XML declaration as the first line. The only occurance of a single quote, lowercase | encoding='utf-8' | in the code occurs in lib/weblib.php:2298 under force_strict_header

Since this was not a problem before before I add the block (and force_strict_header is used for every page) what would cause this problem?? I'm not sure how to make the debug code print out Line Number 1 to see what is there because I don't even know where it is happening in the code.

Does anyone know what this problem is, or even where it happens so I can force it to print more debugging information?

Peter

p.s. The goal of the block is to embed a JavaApplet bitmap editor that contains a save function.