I have a site built using Atahualpa 3.5.3 on godaddy hosting. I've copied the entire site over to a new domain & hostgator hosting, however, the export/import isn't working. I'm getting the error about the txt file not being a proper settings file. (I did have some probelms getting the database configured in case that matters, but everything else appears to be working right.)

I've tried researching this & can't figure it out. I did see where someone mentioned that WPSuper cache caused them problems, which I do have installed, though deactivated.

So, my Atahualpa is version 3.5.3 for BOTH, WordPress 3.0.4 for both. I've attached the settings file here.

I have no idea how it happened but your export had some line breaks where they shouldn't be. I have attached a fixed copy of your export that imported for me.

Thank you larry do you think it could be a bug? Or maybe just something weird with my configuration?

No way to tell. It could have been a glitch when you were exporting.