So this looks absolute to me, here is the definition

B B B B <xsl:param name="srcPath"
B B B B B B B  select="substring-before(base-uri(.), tokenize(base-uri(.),
'/')[last()])"/>

B B B B <xsl:variable name="MODULES_LOC" >
B B B B B B B <xsl:choose>
B B B B B B B B B B B <xsl:when test="$MODE='p1'">
B B B B B B B B B B B B B B B

B B B B B B B B B B B  </xsl:when>
B B B B B B B B B B B  <xsl:otherwise>
B B B B B B B B B B B B B B B  <xsl:text>../asciidoc/modules/</xsl:text>
B B B B B B B B B B B  </xsl:otherwise>
B B B B B B B  </xsl:choose>
B B B B </xsl:variable>

B B B B <xsl:variable name="PARTIALS"
select="substring-after(concat($srcPath, $MODULES_LOC,
'ROOT/partials/'), 'file:')"/>

It is based upon the input XML file and then adds a relative path from
there.

I don't think PARTIALS contains an absolute file: URI if you explicitly
strip the `file:` part of the URI with substring-after. An absolute
file: URI starts with `file:`, so don't strip that.