Okay, what may be confusing me is that the SOAP message trace still shows the escaped characters. And, fails on the mapping that should execute next. I find it very difficult to see exactly what is happening with only the SOAP message trace and the log file so if anyone knows of other tools please share. So the SOAP message trace shows the escaped characters for the CDATA, but the CDATA is gone, and the log shows a fail (copy below) on the mapping (also below) that should be next which is a simple copy of the user's last name to a single string inside a very simple XML structure.
>Information XISOAP: XI message received for processing
>Information SOAP: Continuing to response message 7203c178-dc04-11e5-ad63-0000006fa7ca
>Information SOAP: Processing completed
>Error SOAP: Call failed: com.sap.engine.interfaces.messaging.api.exception.MessagingException: Error encountered while executing mapping: com.sap.aii.af.service.mapping.MappingException: Mapping failed in runtimeRuntime Exception when executing application mapping program com/sap/xi/tf/_MAP_EnablonExport2UserName_; Details: com.sap.aii.mappingtool.tf7.IllegalInstanceException; Cannot create target element /ns0:MT_UserNameOut/UserName. Values missing in queue context. Target XSD requires a value for this element, but the target-field mapping does not create one. Check whether the XML instance is valid for the source XSD, and whether the target-field mapping fulfils the requirement of the target XSD
>Error Returning to application. Exception: com.sap.engine.interfaces.messaging.api.exception.MessagingException: Error encountered while executing mapping: com.sap.aii.af.service.mapping.MappingException: Mapping failed in runtimeRuntime Exception when executing application mapping program com/sap/xi/tf/_MAP_EnablonExport2UserName_; Details: com.sap.aii.mappingtool.tf7.IllegalInstanceException; Cannot create target element /ns0:MT_UserNameOut/UserName. Values missing in queue context. Target XSD requires a value for this element, but the target-field mapping does not create one. Check whether the XML instance is valid for the source XSD, and whether the target-field mapping fulfils the requirement of the target XSD