try this
<xsl:variable name="data" xmlns="">

...Thanks! That solved this simply case.

My actual case (in which do not have this typo!) is more like the following, having a default namespace of xmlns="urn:schemas-microsoft-com:office:spreadsheet"
It appears this is the issue. When I remove that default namespace declaration the node-set thing works just fine.
So my issue is how to reference the $data variable given this default namespace declaration...

<xsl:stylesheet version="1.1" xmlns="urn:schemas-microsoft-com:office:spreadsheet" xmlns:xsl="http://www.w3.org/1999/XSL/Transform" xmlns:exslt="http://exslt.org/common">

  <xsl:variable name="data">
    <root>
      <test>1000</test>
      <test>2000</test>
      <test>3000</test>
      </root>
    </xsl:variable>

    <xsl:template match="/">
      <xsl:for-each select="$data/root/test">
        <xsl:value-of select="."/>
      </xsl:for-each>
    </xsl:template>

</xsl:stylesheet>

----- Original Message ----
From: Geert Bormans <geert@xxxxxxxxxxxxxxxxxxx>
To: xsl-list@xxxxxxxxxxxxxxxxxxxxxx
Sent: Tue, June 22, 2010 2:49:01 PM
Subject: Re:  Nodesets in XSLT 1.1 and 1.0

not commenting on why you should not use XSLT1.1,
you have a typo in your for-each
>         <xsl:for-each select="."/>

should be
            <xsl:value-of select="."/>
or
           <xsl:copy-of select="."/>

At 20:41 22/06/2010, you wrote:
> <xsl:stylesheet version="1.1" xmlns:xsl="http://www.w3.org/1999/XSL/Transform" xmlns:exslt="http://exslt.org/common">
>
> <xsl:variable name="data">
> <root>
> <test>1000</test>
> <test>2000</test>
> <test>3000</test>
> </root>
> </xsl:variable>
>
> <xsl:template match="/">
> <xsl:for-each select="$data/root/test">
> <xsl:for-each select="."/>
> </xsl:for-each>
> </xsl:template>
> </xsl:stylesheet>