I have recently installed psgml-1.2.5.  When I load an xml file (with no line feed) and do a
M-C-\ to indent the region I have marked I get the following error:

External entity C not found

What is causing this problem?

How can I rectify it?

Is M-C-\ the correct command?

I am running emacs 21.2.1 under red hat 7.3.

Thanks