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Microsoft CTE or FOR XML PATH('') Error

Database: Microsoft SQL Server 2008 R2

PeopleTools: 8.50.12

In MOST cases if I use Microsoft SQL Server specific syntax in an SQLExec or Application Engine SQL step, everything works fine. However, if I try to use a Common Table Expression (the equivalent of Oracle's WITH .. AS) I get parsing errors (e.g., error after GROUP ...) or strange behavior (calling a CTE in a FETCH returns NO CURSOR OPEN). Executing this same SQL directly from a SQL Tool works fine. Any thoughts?

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