> It's the 2nd case :) I was trying to conditionally set the 
> variable and then
> save it for later use outside of the block. Oh well, as long 
> as I know why.

The way to do this is

<xsl:variable>
  <xsl:if>
    ...
  </xsl:if>
</xsl:variable>

Michael Kay
http://www.saxonica.com/