To load the XML file, use
<xsl:variable name="bugs" select="document('ref.xml')"/>
assuming the file is in the same directory as your stylesheet.
To select the bugs with a given category and abbreviation, use
select="$bugs/Descriptions/Bugdetails[@category=$category and Bug/@abbrev=$abbrev]"
If the file is very large you can make this search more efficient by using keys (though if you use Saxon-SA it will be optimized for you automatically).
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference