Undefined index....

I have inherited a mess of a home-grown PHP framework that literally 
fills the error_log with 100's of thousands of messages each day. First 
order of business was rotating the logs, now we are working through each 
error to solve them. This is a fairly basic error, but I for the life of 
me cannot remember what the solution is.

I have a recursive function that reads from XML files and replaces xi: 
include directives. It looks like this -

function includeXML($file, $locale, $url, $level = 1) {
     // stuff
     while(($line = fgets($fp)) !== false) {
         if($pos === false) {
             $xml .= $line;
         } else {
             includeXML('repository/' . $included, $locale, (int)$level 
+ $pos - 1);
         }
     }
}

Why do I get the notice that $xml is an undefined index? I do not want 
to suppress the notice, I just want to take care of it properly. I 
attempted setting $xml within the function but then the whole function 
fails for some reason in the depths of this hideous framework. Can 
anyone provide any insight? TVMIA!