One of those duh moments. After hours of beating my head against a wall I solved the problem. I was setting the import file as a result of a calculation. Instead it works just fine if I set it to file and enter the name of the variable instead of a file name.
Import Records [ XML (from calculation): $xml; XSL (from calculation): $xsl ]
Does NOT work. Where:
Import Records [ XML (from file): $xml; XSL (from file): $xsl ]
I must say this is counter-intuitive. But, heck, what works works.
I'll be back with my next head banger question,
I concur. The XML Import screen clearly states that if you are using a calculation to generate an HTTP or FIle Path use the calculation option. I'm not sure why this fails for file paths.