Validating large XML files against XSD schema with .NET

We have a large XML file we need to validate. Large is about ~260MB, which is not really that large. My old code, which was super-fast, is as follows:

        XmlReaderSettings settings = new XmlReaderSettings();
        settings.Schemas.Add(null, _xsdFilePath);
        settings.ValidationType = ValidationType.Schema;
        settings.ValidationEventHandler += new ValidationEventHandler(ValidationErrorHandler);

        StreamReader streamReader = new StreamReader(_xmlFilePath);
        string text = streamReader.ReadToEnd();
        streamReader.Close();

        XmlReader rdr = XmlReader.Create(new StringReader(text), settings);

        _errorLog = "";

        try
        {
            while (rdr.Read()) {}
        }
        catch (System.Xml.XmlException e)
        {
            _errorLog += "\n\nFatal Error: XML is not correctly formed!!!\nError = " + e.Message;
        }

But this code also crashed pretty quickly with a System.OutOfMemoryException. Probably logical, trying to load the entire file into memory, and then handling the entire xml-validation in memory too.

I changed is as follows, reading directly from the file, and now it became incredible slow, and it crashes after a few hours, with the same error (out of memory exception).

        XmlReaderSettings settings = new XmlReaderSettings();
        settings.Schemas.Add(null, _xsdFilePath);
        settings.ValidationType = ValidationType.Schema;
        settings.ValidationEventHandler += new ValidationEventHandler(ValidationErrorHandler);

        XmlReader rdr = XmlReader.Create(_xmlFilePath, settings);

        _errorLog = "";

        try
        {
            while (rdr.Read()) {}
        }
        catch (System.Xml.XmlException e)
        {
            _errorLog += "\n\nFatal Error: XML is not correctly formed!!!\nError = " + e.Message;
        }

Any ideas?