Eric,
>What is the correct syntax to preserve white space using cursortoxml() when passing the XML to .NET?
If you mean that you want the dataset to import the data from XML and preserve the field widths, you need to embed a schema into the XML by setting the 6th parameter of CURSORTOXML to "1" (create inline schema). This will give the .NET dataset the info it needs to create the fields with the data types and lengths of your original cursor.