Disable the ‘Smart Quotes’ option from the QuarkXPress Server Preferences. To do so:

  1. Go to QuarkXPress Server > Preferences.
  2. Under the Application heading select Input Settings.
  3. Uncheck the Smart Quotes option.

Background:
While running in service mode, QuarkXPressServer is attempting to interact with the operating system via a Smart Quote conversion channel. In an ideal scenario this should not happen because QuarkXPress Server does not have a user interface in service mode. Currently, the only way to deviate the Server from entering this channel is to un-check the smart quotes option in the QuarkXPress Server Preferences. Checking the Smart Quotes option forces QuarkXPress Server to automatically replace foot and inch marks (' and ') with quotation marks at the time of import.