> <xsl:key name="part" match="Entity" use="(position() - (position() mod
1000)) div 1000 ">
> [...]
> <xsl:for-each select="Entity[position()  mod 1000 = 0]">
>      <arguments>
>        <xsl:apply-templates select ="key('part',position() div 1000) ">    
 </arguments>
>    </xsl:for-each>
>
> [...]

Shouldn't that be:   <xsl:for-each select="Entity[position()  - 1 mod
1000 = 0]">  ?  B/c as coded, the first 'mod' to == 0 would be node
1000.  What if you only have 999 nodes?  You seem to be "triggering"
off the last node in a group and you want to "trigger" off the FIRST
node in a group.  Right?  You could potentially drop all nodes in the
last group.  Right?

Recognizing the caveat of position()=1 of course.