Gunna guess you have a newer version of flash to me as mine cant open it, on CS3.

Doubt this is of much help though worth a shot:
a) make sure whitespace is ignored, basic though sometimes overlooked: shouldnt cause the issue if loading locally
Code:
xml.ignoreWhite=true;
b) Flash and Xml cannot call information from another domain. The swf, xml and information being called in must be on the same domain. You can get round this via a cross domain xml file. Though you would require an xml file on both domains to do this. (Most likely issue)

Hopefully this helps