> <?xml version="1.0"  encoding="ISO-8859-1" ?>

This is only the encoding of the input-document.

> <?xml version="1.0"  encoding="UTF-8"?>

Standard-output-encoding.

> but with bad output of the umlaute;
> like ä ö ü

It's no bad output, it's correct. But UTF8 needs 2 bytes for the characters.
But for outputting ISO-8859-1 you have to add <xsl:output
encoding="ISO-8859-1"/> to the stylesheet.

Joerg


 XSL-List info and archive:  http://www.mulberrytech.com/xsl/xsl-list