Thanks a lot! I moved the doctype-public attribute to the xsl:output 
element and that has made that error message go away. I also removed the 
reference to the Saxon name space, which does not appear to have caused a 
problem. The bit of code now reads like this:

<xsl:stylesheet xmlns:xsl="" 
<xsl:strip-space elements="*"/>
 <xsl:output encoding="ISO-8859-1" doctype-public="-//W3C//DTD HTML 4.0 
Transitional//EN" method="html"/>

However, fix one error and another one makes itself known. I now have a 
pair of errors linked to 2 xsl:document attributes. The lines of code look 
like this:

<xsl:document method="html" href="{$file}.html">

<xsl:document method="html" href="{$file}recordgrp{$recordgrp}.html">

In both cases, there is a jagged red line under the tml">. Each of these 
lines of code are part of sections that instruct the stylesheet to create 
a new page (either for the collection-level description or for each series 
of the finding aid).

The error codes linked to each of them look like this:

Description: Attribute @method is not allowed on element <xsl:document>

Description: Attribute @href is not allowed on element <xsl:document>

I do not have a clue what to do with this one. Any ideas? 

Sorry to take up so much time,