how do I retrieve the xml data in the view which holds the config data for the form in Joomla 3.1? I see there is in components root folder a config.xml which on view can generate to form html.
The config.xml file is the component configuration, used by the com_config, to set the component settings. It is retrieved when you select "Options" or http://www.yoursite.com/administrator/index.php?option=com_config&view=component&component=com_yourcomponentname
The configuration is saved in the database in the #__extensions table. The parameters that are set, can then be retrieved, for instance in the views, using $this->params->get("param_name");
Recommended reading (this is for 2.5 but the basics are barely similar): http://docs.joomla.org/J2.5:Developing_a_MVC_Component/Adding_configuration