Ok, now the only thing remained to be done is to have a look at your actual blog.xsl and posts.xml files. A useful way to tackle these kinds of problems is if you try to find the minimal working and non-working examples, which then can be posted here. My guess is that either your XSL or XML is invalid, since the problem seems to rise right at the first line. You might not have the usual <xsl:stylesheet version="1.0" blablabla at the first line? Try to find some very basic XML and XSL files that do not work and try to find, what makes your specific version to fail.
in reply to Re^2: XML::XSLT problem
in thread XML::XSLT problem
I myself have often found the solution for various problems just to try to create a basic test case, which can be posted to PerlMonks...