In order to generate PHP parsable output from the Klixo content management system, the file produced must be encoded as UTF-8 (certainly not UTF-16 / unicode).  If not, the file may appear valid in a text file viewer but when compiled, the php code will appear verbatim in the converted HTML file. 

 

To solve this problem, include the line

 

<xsl:output encoding="UTF-8" />

 

...inside the xml:stylesheet tag.