The XSLT 1.0 Engine of XMLSpy conforms to the World Wide Web Consortium's (W3C's) XSLT 1.0 Recommendation of 16 November 1999 and XPath 1.0 Recommendation of 16 November 1999. Note the following information about the implementation.
Notes about the implementation
When the method attribute of xsl:output is set to HTML, or if HTML output is selected by default, then special characters in the XML or XSLT file are inserted in the HTML document as HTML character references in the output. For instance, the character U+00A0 (the hexadecimal character reference for a non-breaking space) is inserted in the HTML code either as a character reference (  or  ) or as an entity reference, .