I just tested this with one of my own data server data sources that did not have an extract associated with it (live connection).
It downloaded as a .tdsx but there wasn't actually data in the file.
Is your intention to edit the tds's XML after download and that is why you can't have it as a binary?
I would expect data source with live connection to just be XML, but those with extracts are binary. We need to be able to source control our data sources. What happens if you accidentally delete a data source? The only way I know is to restore the entire server using tabadmin restore. Therefore, we need to have a way of storing data sources locally.
It's just a zipped tds...rename that bad boy from datasource.tdsx to datasource.zip, then pull the datasource.tds out of the zip file