Actually, now that I look at it, the contains test appears to be working correctly.
The error is showing up in the next line, where I'm trying to get rid of those 2 dashes:

<xsl:value-of select="replace(.,'--',' ')"/>

The style sheet validates in Oxygen, and using Oxygen I can run the transform with no problem. However, when I try to do it in the browser (Firefox or IE) I get this:

Error during XSLT transformation: An unknown XPath extension function was called.

So maybe the problem isn't the double dashes but something else?