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I am attempting to override the default template.
I followed the instructions and managed to get the template over-ride to display in Jomsocial templates admin. (See screen shot)
My problem is that it is not getting used and the template gives me this error: String could not be parsed as XML
The template override method is not like that, your method just copied - pasted the all template files. To override template, you only can do it via Joomla template, please you follow this doc
documentation.jomsocial.com/wiki/Customizing_Template