Not sure how cURL has anything to do with XML data, but...
Two suggestions you'll probably find from different people are either [man]SimpleXML[/man] or [man]DOM[/man] (see this page in the PHP manual for more: [man]refs.xml[/man]).
EDIT: If you're not familiar with OOP programming, DOM can seem a little daunting at first. Since it's my favorite, however, I thought I'd help make it more appealing with an example. :p
Assuming you've loaded the XML into a DOMDocument object, the following code:
$attributes= $doc->getElementsByTagName('REQUEST')->item(0)->attributes;
$request = array();
foreach($attributes as $attr)
$request[$attr->name] = $attr->value;
print_r($request);
shows that the resulting array looks like:
Array
(
[USERNAME] => demo
[PASSWORD] => demo
)