You need to play with the entity conversion settings in the corresponding file type to avoid & being converted to &amp; or < being converted to &lt;

To do so, go to Project settings, File types, select the XML file type used, click Entities and switch off the entities conversion:

You need to experiment a bit with these settings, if the changes applied will not resolve the problems immediately. If you used any embedded content processors, similar actions might be also needed there.

Important update:

After removing the dir="rtl", the client manages to upload the XML successfully.

Why this code was added and how can we modify the setting so Studio won't add it in future projects.

dir="rtl" ist only a hint, that you write from right to left. As for the rest, no advice is possible without having the source xml, your translation and the file type used.

I made additional checks with the client and I found out that removing the added code of dir="rtl" solved the upload problems. However, yet, the conversion of some characters to code, as mentioned above, caused other issues like presenting code with the translation.

The above suggestion didn't solve the conversion code.

How should I proceed instead of a manual change of all conversion codes?

Please make sure, that you are changing the settings mentioned (entity conversion) within the Project settings and not via File -> Options. You MUST change this settings in the project and in the corresponding xml file type and in the embedded content processor. Only then it can take effect. I am quite certain it will change the results, as I have had a very similar case just the other day, where the change in the settings brought the desired result.

Please make sure, that you are changing the settings mentioned (entity conversion) within the Project settings and not via File -> Options. You MUST change this settings in the project and in the corresponding xml file type and in the embedded content processor. Only then it can take effect. I am quite certain it will change the results, as I have had a very similar case just the other day, where the change in the settings brought the desired result.