This error indicates that you are trying to run the old
"Instant Saxon" product, which relied on the Microsoft Java VM. Microsoft
stopped distributing this JVM about five years ago after their lawsuit with Sun.
Please use a more recent version of Saxon, in conjunction with a Java VM that
supports JDK 1.4 or later (typically the Sun JVM). The current release is Saxon
184.108.40.206, which supports XSLT 2.0; or if you really want to use the XSLT 1.0
Saxon processor, Saxon 6.5.5 remains available. See http://saxon.sf.net/ for
There is also an implementation of Saxon 220.127.116.11 that runs
on .NET, if you prefer.