The code is simple enough:
  <xsl:sort select="LAST_NAME" data-type="text" lang="no" />

I think you simplified it too much for us to help:-)

Sorting in XSLT1 is rather under-specified but I don't see how the above
could generate the output that you gave even under the most generous
reading of the rules (assuming your input document does match that
select expression). So either there is a bug in part of the stylesheet
that you didn't show or in your processor.

Can you make a complete (but small) stylesheet and input doc that
produces your bad sorting and state what processor you have. People can
then run it on their system and see what they get...

David

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