The pipe character in the stylesheet is followed by a newline, so both have been copied to the output.
It's best to use <xsl:text>|</xsl:text> to output literal text, it gives you much better control over whitespace. That also applies to
<xsl:text>&NL;</xsl:text>
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Michael Kay
http://www.saxonica.com/
Author, XSLT 2.0 and XPath 2.0 Programmer\'s Reference
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