i want to add a button to the xslt file and on the click of the button(add or save) the data entered into the text boxes must be added to the xml file.(can be done using javascript functions but not sure how)

XSLT takes XML in and puts HTML out. If you know what HTML you want to generate, we can help you write the XSLT to do it. If you don't, we can't.

Modifying files either on the client or the server from within a browser gets you into all sorts of security questions.

Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference