You should use classes available in either System.Xml or System.Xml.Linq to parse XML.
XDocument is part of the LINQ extensions for XML and is particularly easy to use if you need to parse through an arbitrary structure. I would suggest using it rather than XmlDocument (unless you have legacy code or are not on .NET 3.5).
Creating an XDocument from a StringBuilder is straightforward:
var doc = XDocument.Parse( stringBuilder.ToString() );
From here, you can use FirstNode, Descendents(), and the many other properties and methods available to walk and examine the XML structure. And since XDocument is designed to work well with LINQ, you can also write queries like:
var someData = from node in doc.Descendants ("yourNodeType")
select node.Value; // etc..