Whitespace in XSL not appearing if method="xml"

Hi,
My XSL has &#160; and <xsl:text>&#160;</xsl:text> in a few places.
I would like these to appear as &#160; in the output.
When I do a transform using <xsl:output method="xml"> I just get an empty space instead of &#160;
When I use <xsl:output method="html"> I get the &nbsp;  (in this case it shows up even if I don't use the <xsl:text>&#160;</xsl:text> tags to wrap it )but all br tags appear as <br> and not <br/>.
Since this output is going to be XSL (I am doing an xsl to xsl transform using xsl namespace-alias) the output has to be valid xml (meaning that the <br> tag is not acceptable nor is &nbsp;).
I am using Xalan for the transform.
Thanks
PS Yes I read up all the FAQs on the subject (there are a lot)


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