> <!--Create a key to catgeorise titles by first letter-->
> <xsl:key name="cat-by-firstocc" match="document($nsindex/)//link" 
> use="substring(title,1,1)" />
> 
> Xtrans seems to complain about not allowing a variable 
> "$nsindex" in the 
> match statement for the key tag. How do i create a key to 
> group all files in 
> nsindex by first letter of the titles?

Like this:

<xsl:key name="cat-by-firstocc" match="link" use="substring(title,1,1)" />

You don't need to worry that the key is defined against every possible
document; the document to be searched is determined when you call the key()
function.
> 
> Also, i have never created an xsl which only uses imported 
> files before. 
> What do i perform the translation against, an empty xml file?
> 

In XSLT 1.0 there has to be a source document but your stylesheet can ignore
its contents.

In 2.0 you can start the transformation at a named template, which means
there doesn't need to be a source document.

Michael Kay