You've got a couple of different ways you can go.

Let me give one.

You have a source1.xml.
You don't control the formatting of source1.xml.

You can write a stored procedure (uspImportMyXml ) to handle source1.xml.
However, if you ever get into the situation where you need to handle a
different xml (source2.xml), you'll have to write another uspImportMyXml2.
I don't like that scenario.

You can write a strong dataset , which you will take your source1.xml, and
turn it into a dataset.  You can use the dataset(.GetXml) method and send
that to the uspImportMyXml.

The bonus for you is that you can also return dataset.GetXml() without
pulling it back out of the database.

You also may want to write a WebService, instead of relying on the POST
method.
Your html page ( import.aspx ) can piggyback off the webservice if you'd
like.

Your other issue is performance.  How much xml are you talking about?

Some articles:
Xml to Xml (or to DataSet) conversion:
http://sholliday.spaces.live.com/Blog/cns!A68482B9628A842A!148.entry

A decent template for a VS2005 project:
http://sholliday.spaces.live.com/Blog/cns!A68482B9628A842A!140.entry

How to pass Xml into a stored procedure:
http://www.sqlservercentral.com/columnists/sholliday/thezerotonparameterproblem.asp
(not an exact match, but you can find the OPENXML usage there)
This again is a way to pass Xml into a stored procedure for processing.
There are some performance issues with OPENXML you might consider.  But I've
found using this method for bulk data is better than running the same stored
procedure over and over in a loop for multiple records.
What you find there is a derivative of this MSKB
http://support.microsoft.com/kb/315968

Again, this is ` of a few ways you can go.  Look at other ideas also.

But that's how I would approach it.

No idea why u need a DLL, you can write an app to do it. If you must have
the SQL's DTS start the process,  your dll need to be an ActiveX dll.
Anyway, just make the function returning the stream.

Mike,

   The first thing you are going to want to read up on is the section of
the MSDN documentation titled "CLR Stored Procedures", located at:

http://msdn2.microsoft.com/en-us/library/ms131094.aspx

   You will also want to take a look at the CREATE ASSEMBLY documentation
which you will need in order to register the assembly once you have coded it
up:

http://msdn2.microsoft.com/en-us/library/ms189524.aspx

   Take notice of the WITH PERMISSION_SET option, as you will have to set
it to EXTERNAL_ACCESS in order to allow your CLR stored procedure network
access.

   If the request is a simple one, then take a look at the WebClient class:

http://msdn2.microsoft.com/en-us/library/system.net.webclient.aspx

   The methods you are most likely to use are the UploadFile, UploadString,
or UploadData methods.

   If you  need more fine-grained control over the request that you are
sending, use the HttpWebRequest class:

http://msdn2.microsoft.com/en-us/library/system.net.httpwebrequest.aspx

   Hope this helps.