I think it should be sufficient to use
<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet version="2.0"
xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
<xsl:output method="xml" version="1.0" encoding="UTF-8"
indent="yes"/>
<xsl:template match="/">
Age exists=
<xsl:call-template name="subtemp">
<xsl:with-param name="parm"
select="//myelement[(_at_)name = 'karl']"/>
</xsl:call-template>
</xsl:template>
<xsl:template name="subtemp">
<xsl:param name="parm"/>
<xsl:value-of select="exists(@age)"/>
</xsl:template>
</xsl:stylesheet>
..but here you aren't doing anything with the parameter 'parm', the
exists() test would applied to the root and not to <myelement>.
The whole thing could be rewritten as:
<xsl:template match="/">
Age exists = <xsl:value-of select="boolean(//myelement[(_at_)name =
'karl'])"/>
</xsl:template>
If you really wanted it as a named template then you would need:
<xsl:template name="subtemp">
<xsl:param name="parm"/>
<xsl:for-each select="$parm">
<xsl:value-of select="boolean(@age)"/>
</xsl:for-each>
</xsl:template>
cheers
andrew
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