>In order to preserve binary data in the memo field it has to be MEMO/BINARY. Try

CREATE CURSOR test (id i, txt MEMO NOCPTRANS)
INSERT INTO Test VALUES (1, "abs" + CHR(13)+CHR(10)+ "ggj" + CHR(13)+CHR(10) + "asewiof")
lcXml = ""
? CURSORTOXML(ALIAS(),"lcXml",1,0,0,"1")
? XMLTOCURSOR(lcXml, "test1")

It now also works in my code. In addition of using MEMO NOCPTRANS, I had to reset the nFlags value I had set to 4096 before.