Your description of what you've done is very vague, and using words like "yaks" only makes it vaguer. Perhaps you have actually written the entity reference é in your stylesheet (or your source document) without declaring it? It's a fundamental rule in XML that except for the 5 built-in entities (<, etc) you can't use an entity reference unless you declare it first. You can get hold of standard files that declare all the HTML entity references to include in your document (but you'll have to search for them).
Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference