this is easier in xslt2 (where xsl-for-each-group does what you want) in
xslt1 there are essentially two approaches.

1 (the "pipeline" approach) first sort the items, not adding the id
attributes, but do it into a variable
  <xsl:variable name="first-pass">
    the code to generate a list of <li> elements
  </xsl:variable>

then use the xx:node-set() extension function taht most XSLT1 engines
have to allow you to proxcess this, the sorted items now are siblins so
you can do

  <xsl:for-each select="xx:node-set($first-pass)/li">
    <xsl:copy>
      <xsl:if test="...."><xsl:attribute name="id".....



2 (the grouping approach)
View it as a grouping problem, and use one of the XSLt 1 grouping idioms
(google for muenchian grouping) for example You want to group on first
letter, sort the groups, sort each item in each group and add an
attribute on teh first

<xsl:key name="l" match="card" use="substring(full-name,1,1)"/>

<xsl:for-each
select="card[generate-id()=generate-id(key('l',substring(full-name,1,1)))]">
 <xsl:sort select="full-name"/>
<xsl:variable name="letter" slect="key('l',substring(full-name,1,1)))"/>
<xsl:for-each select="key('l',$letter)">
<xsl:sort select="full-name"/>
<li>
<xsl:if test="position()=1"><xsl:attribute name="id"><xsl:value-of
select="$letter/></xsl:attribute>
<xsl:value-of select="full-name"/>

(untested)

David

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