Replace multiple Strings with Data from CSV

Your primary problem is:

• you're storing the AP names and IPs in array variables outside the loop ($APHost and $APIP)

• and then use those arrays as a whole inside your loop, rather than referencing their elements one by one.

Here's a fix, which simply uses $row.Hostname and $row.IP to get the iteration-appropriate values:

$a = Import-Csv -Delimiter ';' .\Ap.csv
$xml = Get-Content -Raw .\Template.xml
foreach ($row in $a) {
    $xml.Replace('Hostname', $row.Hostname).Replace('PIIP', $row.IP) |
      Out-File ".\Aps\$row.xml"
}

However, you should consider using true XML parsing to make your replacements more robust:

$a = Import-Csv -Delimiter ';' .\Ap.csv
$xmlTmpl = [xml] (Get-Content -Raw .\Template.xml)

foreach ($row in $a) {

  # Find the parent Xml element of the elements to update.
  $parentEl = $xmlTmpl.hosts.host

  # Set the hostnames, by element *name*.
  $parentEl.host = $parentEl.name = $row.Hostname

  # Set the IP addresses, by element *name*
  foreach ($el in $parentEl.interfaces.interface.ChildNodes) {
    if ($el.Name -eq 'ip') { $el.InnerText = $row.IP } 
  }

  # XPath alternative (doesn't work in PowerShell *Core*):
  # foreach ($el in $parentEl.SelectNodes('interfaces/interface/ip'))
  # { 
  #   $el.InnerText = $row.IP
  # }

  # Save to file 
  # Note: This doesn't include an XML header.
  $xmlTmpl.OuterXml | Out-File ".\Aps\$row.xml"
}

Note how specific elements in specific places in the document hierarchy are targeted, which is a more robust way of instantiating the template (no potential for false positives).