This is on windows 2000 server using bea web logic 8.1 and Java
1.4.1.  I know the 1.4.1 java version had old xalan so I (think I)
upgraded.  Is my code still pointing to the old stuff?

I think so. The DTM bug was in a sowmwhat older Xalan which
should match one or two of the 1.4.1 patch releases.

Did you install the Xalan 2.6 jar in the lib/endorsed directory,
and are you sure WebLogic doesn't use it's own bootclasspath
logic? Those app servers often have rather strange habits.
Also check the WebLogic documentation on how to override RTL
classes. And upgrading Xerces wouldn't hurt either.