you are missing the standard XML header.
<?xml version="1.0" encoding="UTF-8"?>
<!DOCTYPE ul SYSTEM "http://nowhere.com/menu7-breadcrumb.dtd"> the 2nd line is optional, it is the file location or URL to the DTD which defines the elements used in the document. there are very informative books on writing DTD's, I suggest one that is written specifically for the task because anything else will be a handwaving/gloss-over.
on that 2nd line, ul is the outer container element (doesn't have to be ul, could be library). your XML tags must be contained within that single outer element.
incorrect call to the constructor probably. 1st argument is the filepath. http://us3.php.net/manual/en/simplexmlelement.construct.php