Hi Asad,
I have fixed this in my copy so it will be fixed in trunk next time I merge. The SiteMapProvider was not checking the UseUrlRewriting setting. Really that setting only exists from way back when I first was implementing suppport for friendly urls when it wasn't finished. I never really planned for it to be a permanent setting. I can't imagine a situation where anyone would not want to use friendly urls. But it was a simple fix so it will work with UrlRewriting disabled. However, it won't work for folder based sites because folder based sites relies on UrlRewriting. Probably I should remove that setting from Web.config so no-one is tempted to set it to false.
Best,
Joe