Thanks very much for the suggestions! 
Message-Id: <iss.12c5.4284cb1e.d8de8.1@xxxxxxxxxxxxxxxxxx>

> I would guess that you are using MSXML? 
> Are you using Microsoft's XSLT processor? If so, the best advice is don't:

I am using the XMLSpy (2004 rel. 3) built in XSLT engine, as well as MSXML, 
with the same results.  The problem with xsl:preserve-space seems to be 
that it works on text-only nodes, and not on nodes with mixed content, 
such as in my case. I have no problem retaining the spaces in text-only 
nodes (e.g., <THD>   Blah Blah    </THD).

>The other question is, do you want white space in the HTML "source", or
> white space on the browser screen? 

I have no problem getting the browser to display the spaces if they are 
included in the html source.

Thanks again for any suggestions!

Jim