I was working through John's suggestions, and he has solved the problem. 

I needed the <file:> and three slashes, because I am working in the Windows environment.

Thank you for the assistance.

-- terry

* * * * * * * * * * * * * * *
<xsl:if test="java:file-exists( $dataFile, 'file:F:/shapeFiles/' )" >
---------------------------------------------------------------------
net.sf.saxon.trans.XPathException: Exception in extension function
     {public java.io.File(java.net.URI)}: java.lang.IllegalArgumentException: URI is not absolute
Exception in extension function {public java.io.File(java.net.URI)}: 
      java.lang.IllegalArgumentException: URI is not absolute

* * * * * * * * * * * * * * *
<xsl:if test="java:file-exists( $dataFile, 'file://F:/shapeFiles/' )" >
-----------------------------------------------------------------------
net.sf.saxon.trans.XPathException: Exception in extension function
     {public java.io.File(java.net.URI)}: java.lang.IllegalArgumentException: URI has an authority component
Exception in extension function {public java.io.File(java.net.URI)}:
       java.lang.IllegalArgumentException: URI has an authority component

* * * * * * * * * * * * * * *
<xsl:if test="java:file-exists( $dataFile, 'file:///F:///shapeFiles/' )" >
--------------------------------------------------------------------------
works!!