I have same prolem and I am starting to fear that this behaviour is "by design".  Do the controls populate correctly when you load the data manually using the Forms->Manage Form Data->Import Data.... menu.  Exact menu may vary depending on versions etc.

I have bound a drop-down to an XML file and the form previews perfectly in LiveCycle.  However when the PDF is viewed in outside of LiveCycle (e.g normal Adobe Acrobat) the drop-down is empty.I have checked;1. Default File Type for New Forms in Tools->Options->Document Handling is set to Acrobat 8 ...

I have the exact same problem  I have bound a drop-down to an XML file and the form previews perfectly in LiveCycle.  However when the PDF is viewed in Reader the drop-down is empty.I can not find anywhere in the doco that says that this is not possible and AFAI can see this should work.