codice:
<?PHP
    function get_tree($xml,$baseurl,$sub=1) { 
        $result = "";
        foreach($xml->item as $children){
            if (!$children->menu) 
                continue; 

            if( $sub==1 ){ 
                $result.="<ul>\n"; 
                $descr=$children->description; 
            }else{ 
                $descr=$children->description; 
            } 

            $result .= "\t[*]\n"; 

            if (isset($children->link)){ 
                $result .= "\t\t<a href=\"".$baseurl."/".$children->link."\" title=\"".$descr."\">".$children->menu."</a>\n";
            } else { 
                $result .= "\t\t<a href=\"#\" title=\"".$descr."\" class=\"continua\">".$children->menu."</a>\n";
            } 

            $result .= get_tree($children,$baseurl,1); 
            $result .= "\t\n"; 

            if($sub==1) 
                $result.="[/list]\n"; 
        } 

        return $result; 
    }

    $result = "";
    $xml = simplexml_load_file('menu.xml'); 
    $result.=get_tree($xml,""); 
    $result.="[/list]"; 

    print $result;

?>
è bastato inizializzare $result dove serviva e mettere:
function get_tree($xml,$baseurl,$sub=1) {
invece che:
function get_tree($xml,$baseurl,$sub=0) {