> My understanding of how the <xsl:copy> and <xsl:copy-of> commands is
> weak and so am having trouble figuring out the exact problem.

xsl:copy will copy the current element only, without it's attributes or
children, to the result tree.

xsl:copy-of copies everything, attributes and children.

In your root matching template you create a literal result element
<TopConcept>, and then apply-templates on the <TopConcept> element under
the root.  The first instruction in the matching template that gets
applied is xsl:copy, so you will get another <TopConcept> in your
output.

The rest of the stylesheet also needs looking at, eg:

 <xsl:for-each select="/*/*/O/Class[text()=$notPresent]">
   <xsl:apply-templates select="/*/*/O/Class[text()=$notPresent]"/>
 </xsl:for-each>

and:

 <xsl:template match="@* | node()">
   <xsl:copy>
     <xsl:copy-of select="@*"/>
     <xsl:apply-templates select="@*"/>
   </xsl:copy>
 </xsl:template>

...are both a bit off but I'm guessing you are trying things out?