Alright. I've found the solution.
This problem is caused by the HTML Minify settings and it resolves when you disable it altogether.
I hope W3TC fixes this issue, cos as it is now, I cannot minify HTML using the plugin.
Anyone who has this problem should disable HTML Minify settings.
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obitexa on "[Plugin: W3 Total Cache] W3TC Causing 'Sitemap is HTML' error in Yoast Sitemaps"
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