The error you describe usually occurs when Xyce can get a DC operating point but can’t make the first step into transient simulation. This can occur if there is some sort of discontinuity between time = zero and time > zero. Look for voltage sources that are zero at time zero and got to something non-zero right after that.
You’re looking for anything that can cause a discontinuity between time time = 0 and time > 0. That’s why the time step where it failed was so small.
Good luck,
Rich