tried that, getting an empty match.

here is the actual stylesheet i am using:

    <?xml version="1.0" encoding="UTF-8"?>
    <xsl:stylesheet version="1.0" xmlns:exsl="http://exslt.org/common" xmlns:xsl="http://www.w3.org/1999/XSL/Transform" xmlns="http://www.w3.org/1999/xhtml">
      <xsl:output method="html"/>

      <xsl:variable name="nav-menu">
        <item href="/">Home</item>
        <item href="/about.xhtml">About</item>
      </xsl:variable>

      <xsl:template match="document">
        <html>
          <head>
            <meta charset="utf-8" />
            <title><xsl:value-of select="title" /></title>
            <link rel="stylesheet" type="text/css" href="site.css" />
          </head>

          <body>
            <!-- <xsl:apply-templates select="document('nav-menu.xml')/menu"> -->
            <xsl:apply-templates select="exsl:node-set($nav-menu)/item">
              <xsl:with-param name="current" select="@name"/>
            </xsl:apply-templates>
            <xsl:apply-templates select="content" />
          </body>
        </html>
      </xsl:template>

      <xsl:template match="item">
        <xsl:param name="current"/>
        <xsl:choose>
          <xsl:when test="@href=$current">
            <a class="selected"><xsl:apply-templates/></a>
          </xsl:when>
          <xsl:otherwise>
            <a href="{@href}"><xsl:apply-templates/></a>
          </xsl:otherwise>
        </xsl:choose>
      </xsl:template>

      <xsl:template match="content">
        <xsl:apply-templates select="@*|node()" />
      </xsl:template>

      <xsl:template match="@*|node()">
        <xsl:copy>
          <xsl:apply-templates select="@*|node()"/>
        </xsl:copy>
      </xsl:template>
    </xsl:stylesheet>

documents look like this:

    <?xml version="1.0" encoding="UTF-8" ?>
    <!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd">
    <?xml-stylesheet type="text/xsl" href="site.xsl"?>
    <document name="about">
      <title>About Us</title>
      <content>
        html content here, to be inserted without change
      </content>
    </document>

if i use the document() function, with nav-menu.xml looking like this:

    <menu>
      <item href="/">Home</item>
      <item href="/about.xhtml">About</item>
    </menu>

then i get the menu items, but the test <xsl:when test="@href=$current"> fails