Nevermind. it was the single-quotes around the variable references.  If
I remove those it works!

<xsl:stylesheet version="1.0"
xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
	<xsl:output method="xml" version="1.0" encoding="UTF-8" indent="yes"/>
	<xsl:template match="LineItems">
		<LineItems>
			<xsl:call-template name="loopMe">
				<xsl:with-param name="counter" select="0"/>
				<xsl:with-param name="max" select="count(Quantity/*)"/>
			</xsl:call-template>
		</LineItems>
	</xsl:template>
	<xsl:template name="loopMe">
		<xsl:param name="counter"/>
		<xsl:param name="max"/>
		<xsl:if test="$counter &lt; $max">
			<xsl:variable name="quantity" select="concat('Quantity',
format-number($counter, '0000'))"/>
			<xsl:variable name="description" select="concat('Description',
format-number($counter, '0000'))"/>
			<LineItem>
				<Quantity>
					<xsl:value-of select="//*[name()=$quantity]"/>
				</Quantity>
				<Description>
					<xsl:value-of select="//*[name()=$description]"/>
				</Description>
			</LineItem>
			<xsl:call-template name="loopMe">
				<xsl:with-param name="counter" select="$counter + 1"/>
				<xsl:with-param name="max" select="$max"/>
			</xsl:call-template>
		</xsl:if>
	</xsl:template>
</xsl:stylesheet>