you can't use variables in match patterns.
This restriction is removed in 2.0 sp you could switch to saxon8.
However you can always move the variable to an xsl:choose or if
instead of
<xsl:template match="Product[not(starts-with(@code, $typ))]" />
do
<xsl:template match="Product">
<xsl:if test="starts-with(@code, $typ))]">
<xsl:call-template name="id"/>
</xsl:if>
</xsl:template>
<xsl:template match="@*|node()" name="id">
...
David
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