>I get a file cannot be displayed error.
That suggests to me that the problem is nothing to do with the XML and XSLT code that you have posted, and is instead something to do with the way you are running the transformation. All you've told us about that is that you are using ColdFusion MX7's XmlTransform() method. It looks as if you are using it incorrectly. So to help you, one will need (a) to see your code, and (b) to know Coldfusion's API. You're likely to be better off on a list that's specific to that product.
Incidentally, it also helps to post the precise error message, not a paraphrase. The exact wording might mean nothing to you, but it might well be recognized by someone else.
Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference