Im still a little unsure of the problem (doing many things at once, not good!). Is it happening like this:
original file
Hello There
file contents from S/Reader
HelloÚThere
Is that how it is coming across? I used to get problems with Stream Reader This code (which is basically the same as yours) works fine without any strange additional characters:
System.IO.StreamReader StreamReader1 =
new System.IO.StreamReader("myfile.txt");
String data = StreamReader1.ReadToEnd();
textBox.Text = data;
StreamReader1.Close();