>Is there a way by which I can get "a, b, <i>c</i>, <b>d</i>"

You need to replicate the node which is:

    <xsl:copy-of select="$txt-with-node"/>

==>Yes!! You are right. It is working fine. But I want to tokenize it and I
am using 

<xsl:for-each select="tokenize($txt-with-node, ', ')">

Which is not working. Please suggest