after a bit of messing around i have managed to come up with the following. its still a bit buggy and the code is kind of a mess but i thought iād post it up here anyway.
Demo XML and Photos
[list]
[]xml
[]sample pics
[/list]Version 2
[list]
[]swf
[]fla
[/list]the sample pics are in a zip and weigh in at a tad under 3mb or so (i used a fair few of them :P) anyway, if you download all those files and put em into a single directory it will work 
acknowledgements go to many other posts in this forum from which i have gotton ideas (and to which various sections of my code looks correspondingly the same)
anyway, um, yeah, tell me what you think 
(btw i suggest just going right click --> save for the xml)
Version 2 - added a preloader for the thumbnails