Can anyone tell why the code below will not work?

    <xsl:sort select="data" data-type="number"/>


well, we have to guess, as you haven't shown the relevant part of your
code, but my guess is that you have

<xsl:for-each select="data">
    <xsl:sort select="data" data-type="number"/>

which means that the sort key in each case is the string value of 
the data child of the current data element, converted to a number,
but as there are no such elements all elements get the same sort key
(NaN in xslt1, () in xslt2) and so no sorting happens.

use 

    <xsl:sort select="." data-type="number"/>

as you want the value of the element itself, not of a child.

David