I have changed my if to:
<xsl:if test="$Found = ''">
so that's changed your template from not using the variable to using it.
and still no luck.
You need to show more code, probably. You are calling current-group()
but don't show any use of for-each-group, (if there is none,
current-group() will be empty, so $Found will always be the empty string
and not($found) will always be true. If this named template is being
called from inside a for-each-group, it depends on how its called...
David
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