cast varchar conatining & to XML

HI,

I facing problem in using the XML embeded inside XML.

from C# code am escaping the special characters and passing to SP as shown below.

NOT able to cast the varchar as XML for below input:

DECLARE @XML XML            
SET @XML = '<SupportUtility>            <Actions>            <Action Category="DocumentsAndImages" SettingName="InstalledDMS">                                             <Parameters Param="SourceDMSXML" Value="&amp;lt;DocumentName&amp;gt;Procedures&amp;lt;/DocumentName&amp;gt;"/>                                 <Parameters Param="RegionID" Value="2"/>            </Action>            </Actions>            </SupportUtility>'  
Declare @SourceDMSXML as varchar(max)
SELECT  @SourceDMSXML = @XML.value('(/SupportUtility/Actions/Action/Parameters[@Param = "SourceDMSXML"]/@Value)[1]','varchar(max)')                
SET @SourceDMSXML = Replace(@SourceDMSXML , CHAR(13), '&#13;');            
SET @SourceDMSXML = Replace(@SourceDMSXML , CHAR(10), '&#10;');            
SET @SourceDMSXML = Replace(@SourceDMSXML , CHAR(9), '&#09;');            
SET @SourceDMSXML = Replace(@SourceDMSXML , '&amp;', '&');  
DECLARE @SourceXML XML                        
SET @SourceXML = CAST(@SourceDMSXML AS XML) 
select @SourceXML    

But same works if i am having " < " instead of " < " and " &gt" instead of " > "

i.e it works if i replace the parameters as shown below.