1. You don't need to enter the physical path to AdvertisementFile property. It should be a relative path.
Change your code as below
<asp:AdRotator ID="AdRotator1" runat="server" AdvertisementFile ="~/App_Data/banner.xml"/>
2. You need to give the image file as like AdvertisementFile. For example, if the image file is in the root directory of the web site, then image path should be as below
<ImageUrl>YourImageFileName.jpg</ImageUrl>
If you keep the images in a folder, for example in 'images' folder, then it should be
<ImageUrl>>~/Images/YourImageFileName.jpg</ImageUrl>
3. Impressions is a value that indicates how often an advertisement is displayed in relation to other advertisements in the XML file.