It seems that DSS is unable to uncompress .xz files via a FTP connection :
DSS use the commons-compress Java library who manage XZ files. So is it a bug?
XZ compression is not supported, whether on FTP or other storage.
I would suggest either using Zip/GZip compression or, if you can't, using a python recipe (with Managed Folders as input [over FTP] and output [over local filesystem]) to uncompress the file.