small grouping task

Source XML
----------

<div>
<p>text</p>
{surronding xhtml}
<p class="problem">{some xhtml with no inputs}
  <input type="radio" /> <span class="p">a</span><br />
  <input type="radio" /> <span class="p">b</span><br />
  <input type="radio" /> <span class="p">c</span><br />
  <input type="radio" /> <span class="p">d</span><br />
{some xhtml with no inputs}
</p>
{surronding xhtml}
</div>

Target XML
----------

<div>
<p>text</p>
{surronding xhtml}
<p class="problem">{some xhtml xml with no inputs}
   <ul class="m">
       <li class="m"> <span class="p">a</span></li>
       <li class="m"> <span class="p">b</span></li>
       <li class="m"> <span class="p">c</span></li>
       <li class="m"> <span class="p">d</span></li>
   </ul>
{some xhtml with no inputs}
</p>
{surronding xhtml}
</div>
------------------------------------------------------------

starter XSL
---------------
<xsl:template match="*">
   <xsl:copy>
       <xsl:copy-of select="@*"/>
       <xsl:apply-templates/>
   </xsl:copy>
</xsl:template>

<xsl:template match="p[@class = 'problem' and input]">
   {what do I do here?}
</xsl:template>