> 1. is <b code="123"/> is empty node just like <c/> ?

"empty node" is not a defined term. It is a node representing an empty
element.

> 2. what's wrong with my not() function ?

Nothing, but it is never true.

<xsl:when test="not(.)"/>

. is the current node, so not(.) is true if the node set containing the
current node is empty, but it is never empty.

You want

<xsl:when test="not(node())"/>

which is short for

<xsl:when test="not(child::node())"/>

and tests if the current node has child nodes (including text and
comments etc.

David

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