I believe HTML in task notes need to be surrounded with CDATA otherwise XML parsers have trouble with the html properties:

[org.xml.sax.SAXParseException: The entity "nbsp" was referenced, but not declared.]

<TaskNoteDetail>

<task_notes>&nbsp;Exactly what we needed.¬ Thank you so much Katy!&nbsp;... Task Note Added&nbsp;</task_notes>

...

</TaskNoteDetail>