You sure its a Windows Server your deploying to?
How aboutuploading an .htaccess file in the same folder as your deployment root with the following:
AddType application/x-ms-application .application
AddType application/x-ms-application .manifest
AddType application/octet-stream .deploy
That should stop it from showing you the XML code and will access process the file.
Good luck. Let me know if it works.