as I said earlier, XSLT has much more natural ways to iterate over a
structure than using integer count variables.
In this case, I think you just want:
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"; version="1.0">
<xsl:output method="xml" indent="yes" />
<xsl:template match="Parameters">
<parameters>
<xsl:apply-templates select="*"/>
</parameters>
</xsl:template>
<xsl:template match="parameter">
<parameter gridx="{floor((position()-1) div 2)}" gridy="{position()-1 mod 2}">
<xsl:value-of select="normalize-space(name)"/>
</parameter>
</xsl:template>
</xsl:stylesheet>
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