Yes u deifintely can create links using an xml file. You would load the xml content into flash and then create the links using the values retrieved from the xml object.
You can write to the xml file from flash but you would need to use a server side language to update/overwrite the xml file with the new content.
I think if you do a few google searches or even ask here you may find quite a lot of good articles of integrating flash with xml




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