> The above code parses correctly via xsltproc, b
That would be strange. XSL files have to be well formed XML documents
and XML attributes can not contain element narkup (or any other use of
the < character)

   <DIV ID='<xsl:value-of select=

is not well formed XML so should be rejected by the XMl parser before
XSL starts.

You want    <DIV ID='{fname}"


David


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