The problem is this line:
IF rsp.Parse(ReadAsciiFile(xml))
ReadAsciiFile is intended for reading local text files into a string. You already have a string from your roUrlTransfer request. You also have your rsp and xml variables backwards. Change the first few lines to this, and you should be good...
http = CreateObject("roUrlTransfer")
http.SetUrl("http://roku.jjtdigital.net/salvation_army2/videos.xml")
rsp = http.GetToString()
xml = CreateObject("roXMLElement")
If xml.Parse(rsp) Then
...
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