I am trying to write a stylesheet that processes an xml file and assigns a globally unique id tag to the output of each node I process. These tags are not present in the original xml. I thought of just creating a variable and incrementing it and using that but it seems that varaibles are not really so variable in xsl. How is this done?

You can't increment variables in XSLT like you do in procedural
languages like JavaScript. You usually don't need to do this.

For your specific problem, look up the generate-id() function:
 http://www.w3.org/TR/xslt#misc-func

If this doesn't quite fit (unlikely, but possible in some situations),
use a combination of hard-coded prefixes, generate-id(),
parameters passed through recursively processed templates and
perhaps position() and xsl:number