Found this problem and was able to solve it using Excel. Basically, when you open a file for editing in Excel, you need to save it again using the UTF-16 Unicode Text (.txt) format rather than other text formats. This requirement was specified in the Application Loader documentation.
You also need to check that there are no extra spaces or quotation marks in front of individual cells.
I had the same error as the original poster, but after using Excel to edit the file and re-save it in UTF-16 Unicode Text (.txt) format, it worked perfectly with Application Loader 3.4.
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