OK, this is do-able, but it can be complicated.
There are a number of ways i can think of doing this.
Both PHP and Perl offer interface to the Gd graphics library which will let you create images on the fly from your scripts.
Depending on your version of PHP it might already be installed, otherwise you will have to get it yourself, same goes for Perl. Check out CPAN for Gd, or PHP.net for details on how to use it. Ive never used it so i cant advise you on exactly how it works.
If you wanted to create animated banners im not sure if Gd will do it, it might. But you could use Ming which is available for PHP and Perl, that might give you more flexabilty for animated stuff as it lets you create flash objects.
I think you will find the XML bit easier. If you give me an example snippet from your XML feed i will see if i can make an example parser for you.
[edited by: Mike12345 at 2:14 pm (utc) on Nov. 16, 2006]