/*For safety reasons I would only allow the PHP file to determine the location of the file...if you want the ability to pick your file just post and I will modify my code*/
$file = "test.txt"
//Test if file exists
if(file_exists($file))
{
    //Open the file in read mode
    $fp = fopen($file, "r") or die("Error: Cannot open file");
   //Cycle through file
   while(!feof($fp))
   {
      //Return the file for AJAX to use
      echo fgets($fp);
   }
}
else { die("Error: Cannot find file"); }