[xsl] strip-spaces

[Steven Ericsson-Zenith <steven@xxxxxxxxxxxxx>]

Dear List,

I have

 <xsl:output
        indent="no"
        method="xhtml"
        doctype-public="-//W3C//DTD XHTML 1.0 Strict//EN"
        doctype-system="http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd 
" />
 <xsl:strip-space
        elements="*" />

in a style sheet, and the following template:

    <xsl:template
        match="foobar">
        <xsl:element
            name="span">
            <xsl:attribute
                name="class">c</xsl:attribute>
            <xsl:element
                name="div">
                <xsl:attribute
                    name="class">d</xsl:attribute>
                <xsl:attribute
                    name="style">display:none</xsl:attribute>
                <xsl:element
                    name="p">
                    <xsl:attribute
                        name="style">text-transform:capitalize;text- 
align:left;</xsl:attribute>
                    <xsl:element
                        name="em">
                        <xsl:apply-templates
                            select="t" />
                    </xsl:element>
                </xsl:element>
                <xsl:element
                    name="p">
                    <xsl:apply-templates
                        select="d" />
                </xsl:element>
            </xsl:element>
            <xsl:apply-templates
                select="t" />
        </xsl:element>
    </xsl:template>

For some reason this template alone, of all the many templates I have  
in this style sheet, is not stripped - and that failure to strip  
produces a faulty layout in IE (spit).

I've tried all permutations but I don't understand why it is not  
stripped. Can someone enlighten me?

Sincerely,
Steven