That's an oversight on my part. Any elements outside of step elements have
to be processed individually. Can I change the for-each-group to just group
adjacent <step> elements?

<xsl:for-each-group select="*" group-adjacent="boolean(self::step)">
              <xsl:choose>
                  <xsl:when test="current-grouping-key()">
                      use your template here
                  </xsl:when>
                  <xsl:otherwise>
                      <xsl:apply-templates select="current-group()"/>
                  </xsl:otherwise>
              </xsl:choose>
          </xsl:for-each-group>