I figured out the solution!

Code:
var req: URLRequest = new URLRequest("menuDef.xml");
var loader:URLLoader = new URLLoader(req);
var i:int
var myXML:XML = new XML();
loader.load(req);


loader.addEventListener(Event.COMPLETE,dataLoaded);
//Button code
function dataLoaded (event: Event){
	myXML = new XML(loader.data);
	for (i = 0; i < 5; i++){
		var j:int = i+ 1; 
		/**3 is the line in the  
		xml the labels start from. (i) starts counting from the 4th line until the end
        specified above.**/		
		this["btnMenu"+ j].btText.text = myXML.child(3).child(i);
	}      
}
If the items in your xml file are more or less than "5" change the number to suit.