For this specific case I recommend using the %SQL_Util.CSV stored procedure since it handles CRLF on linux correctly. Note - RFC 4180 uses CRLF as the line terminator.

In situations where you need to manually read line-by-line simply trim trailing whitespace including CR

While 'file.AtEnd {
  Set line = file.ReadLine()
  Set line = $ZStrip(line, "<>W", $C(13))
  // ...
}

FWIW I was able to pull this successfully on Apple M2 macOS 14.4 docker engine 25.0.3. 

A word of caution - you can exhaust RAM when correlating a object with a collection like this. The pattern I use for collections of unknown size is to correlate the collection tag and loop over the items. If the collection parent (eg Envelope here) is also needed you can use XSL to reorganize the XML nodes to make it easier for the XML reader to iterate.