Technically it's the same as both programs share the same streaming engine.
RadioCaster that has problems with txt files
There's no problem with text files in RadioCaster. It simply reads the file contents and uses them as streaming title. To make sure the title is read correctly, please click the Status button and see that "Current track title" contains the correct title. This is what RadioCaster sends to the server as track title.
leaves the same error very often: W40 warning! title update failed
This means that RadioCaster had sent the title to the server, but the server did not accept this title for some reason. Possible reasons are using some special characters (e.g. to make your station more prominent) or too long title or something else. The exact reason can be determined if you inspoect server logs.
Another possibility, you can try switching the title encoding in RadioCaster - open the encoder properties, Metadata tab, select either ANSI or UTF-8 and see what works the best with your server.