The Flash player security model prevents the gridNavigation from loading images from a domain it is not hosted on. You can use a proxy file to workaround this issue, this tutorial describes how.
1. Make sure that you have completed the Using XML tutorial.
2. Download a copy of the proxy file from here.
3. Unzip the file and using FTP software such as CuteFTP (Windows) or Captain FTP (Mac) upload the PHP file to the server that will host your .swf file.
4. Open the XML file you created in step 1. Locate the path attribute and adjust its value so that it appears as follows:
<thumbnail><![CDATA[http://www.yourdomain.com/crossDomainImage.php?src=http://www.yourotherdomain.com/thumbnail_image.jpg]]></thumbnail>
<image><![CDATA[http://www.yourdomain.com/crossDomainImage.php?src=http://www.yourotherdomain.com/image.jpg]]></image>
Change the section highlighted in red to match the location of the proxy file you uploaded to your server in step 3.
Change the section highlighted in green to match the location of the folder on your second server that contains your images.
5. Using your FTP software you can now upload your .xml and .swf files to your server and your images to your second server.