I'm having the same issue with one of my customers I'm consulting with. We've done 100's of WordPress installs on our own or other dedicated machines with no issues.
Some hosting companies have issues with WordPress plugins due to the path structure in some hosting environments.
I can FTP into root directory, delete Yahoo's preloaded sitemap.xml file and load a custom generated file, but it will always display the original Yahoo file. This tells me it's pulling the file from another location possibly.
I'll be contacting Yahoo this week to see if they have any insight. On my last call with them, they say they do not provide any support for WordPress plugins which is odd since they preload a bunch of customized Yahoo plugins.
Yahoo also does some other odd things:
1) You can only use permalinks structure that Yahoo allows, you cannot modify.
2) Yahoo provide SEO plugin, but you have no access to it. We have not worked with enough Yahoo installs, but I'm guessing you can uninstall a Yahoo preloaded pluging and manually install the plugin yourself.