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

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?

Thanks
Rahil