> I am wanting to count all preceeding sibling (steps) but they could be
> in different elements

In that case they are cousins, not siblings. Two elements are siblings only
if they share the same parent.
>  
> <element1>
>   <element2>
>      <step/>
>      <step/>
>   </element2>
>   <element3>
>      <step/>
>   </element3>
>   <element4>
>      <step/>
>      <step/>
>      <step/>
>   </element4>
> </element1>
>  
> The output I am after is
> 
> <element1>
>   <element2>
>      <step number="1" />
>      <step number="2"/>
>   </element2>
>   <element3>
>      <step number="3"/>
>   </element3>
>   <element4>
>      <step number="4"/>
>      <step number="5"/>
>      <step number="6"/>
>   </element4>
> </element1>
>
  
Use <xsl:number level="any" from="element1"/>

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