<p>I have created a site, which parses XML files and display its content on the appropriate page. Is my site a dynamic web page or static web page?</p>

<p>How do dynamic and static web pages differ?</p>

<p>I feel it's dynamic, because I parse the content from xml files; initially i don't have any content in my main page..</p>

<p>What do you think about this, please explain it..</p>

Static web pages would be plain HTML content that are delivered. If you are processing any type of XML files at the server side and generating content accordingly, this is a dynamic page. Static pages change content when the page is actually edited & modified.
First result on Google if you had searched for it explains it.
http://websiteowner.info/articles/pages/pagetypes.asp
Also, stating that static websites are not updated regularly is not correct. The web and HTML was around even before we started writing stuff in Perl & PHP. There are/were sites that had heavy traffic and were being modified manually.