Hi,
my advice is to use a numerical entity; so for " " you could just
write
" ".
An alternative, if you prefer to write it in a symbolic way you can:
1) add <!ENTITY > declaration in the DTD of your sheet
2) you can create a named template like this:
  <xsl:template name="ent:nbsp">
     <xsl:text>&#x20;</xsl:text>
3) AVOID THIS: use xsl:text with 'disable-output-escaping="yes"' attribute
  and do this: <xsl:text
disable-output-escaping="yes"><![CDATA[&nbsp;]]></xsl:text>
  but this way is NOT THE RIGHT ONE.
  THINK TWICE BEFORE USING disable-output-escaping :))
Hope this helps!
Regards,