Thanks for the response. 'None' seems a little ambiguous to me... does it mean that I don't want any metadata, or that it isn't going to remove any? Mine is set to 'None' and it is removing metadata.
"None" here means no metadata preset is being applied to imported pics. A common mistake is to have a metadata preset for applying, say, a copyright notice, that accidentally clears other metadata. If you have "none" set, then that isn't the problem here.
LR ignores .xmp sidecar files for .jpg files (something that a number of users have complained about). So, at least in normal operation, the presence of a .xmp sidecar has no effect on the metadata imported for a .jpg.
1. Do you also have a raw file of the same base name in the same folder?
2. Upload to Dropbox (or similar) before-import and after-import copies of a sample .xmp and .jpg that exhibit this problem. This will let us determine whether the problem occurs in other LR configurations and look in detail at the files' metadata, narrowing down whether this is a workflow problem or a bug and possible workarounds.