I disagree it is a settings issue.
I have disabled my firewall and anti-virus to rule out uploading problem and still the same error message. The install I am using is very new and no settings have been changed. Today I uninstalled and re-installed WP with the same error message.
I suspect the issue lies in either the export from the .com or import module in 4.0.
Reason why I say this, I have not received an adequate explanation regarding the error message while importing the file. In addition, I have addressed the file size issues and addressed any other issue that I can think of that will interfere with importing the file. The only thing left is a WordPress issue that deals with how the file is exported from .com or how the xml file is imported into the .org WordPress site.