> Concluding the problem is node-format vs text format, I tried 
> the saxon evaluate function, but:
> <xsl:copy-of
> select="saxon:evaluate(document('file:/C:/dir/order.xml')/$ins
> tance.path)"  
> />
> writes nothing, neither does value-of.

You're on the right lines here, but the syntax would be

select="document('file:/C:/dir/order.xml')/saxon:evaluate($instance.path)"

I strongly suspect that there are much better solutions to this problem that
don't involve dynamic evaluation. However, it's Easter Sunday.

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