Third reply is a charm. :)
You don't pass that method a file name, you have to use the downloader object. I created a simple example of this here:
http://blogs.sqlxml.org/wpfe/downloadxaml/
Xaml: http://blogs.sqlxml.org/wpfe/downloadxaml/download.xaml
JS: http://blogs.sqlxml.org/wpfe/downloadxaml/eventhandlers.js
Take a look at that. It uses the downloader object to load the techy.xaml file which is part of the WPFEPad example (which also uses the downloader object). I didn't add the progress bar because I didn't have time.
If you want I'll try to write up another sample that wraps all this so that you can have a call that looks like:
var xamlFrag = myObject.createXamlFromFile([filename])
That should be pretty easy to do,but you don't need it since the above example works.