Here is my code, it's failing validation below, where I've bolded, italicized, etc.

Since it is working , if only showing a failure, that's a good sign.  Don't know just yet why I can't attach a debugger but even without, nothing jumps out at me here.

Keeping it simple ... I'm missing the right schema definition and that's the problem.  Also, the template file does *not* have an associated .resources file, that jumps out at me.  I'm going to look up portal.template.xsd now and see if the most recent schema just ain't thar. :) (not present)

               try
                {
                    bool blnChild = true; //Set this to true.  Parent Portals will never be created by ABFR
                    string strPortalAlias = string.Empty;
                    string strChildPath = string.Empty;
                    var closePopUpStr = string.Empty;

                    var objPortalController = new PortalController();

                    //check template validity
                    var messages = new ArrayList();
                    string schemaFilename = Server.MapPath(string.Concat(AppRelativeTemplateSourceDirectory, "portal.template.xsd"));
                    string xmlFilename = template.TemplateFilePath;
                    var xval = new PortalTemplateValidator();
                    if (!xval.Validate(xmlFilename, schemaFilename))
                    {
                        DotNetNuke.UI.Skins.Skin.AddModuleMessage(this, "", String.Format(Localization.GetString("InvalidTemplate", LocalResourceFile),
                            Path.GetFileName(template.TemplateFilePath)), ModuleMessage.ModuleMessageType.RedError);
                        messages.AddRange(xval.Errors);
                        lstResults.Visible = true;
                        lstResults.DataSource = messages;
                        lstResults.DataBind();
                        validationPanel.Visible = true;
                        return;
                    }