Saxon

Passing parameters should be easy, expecting Saxon to deal with Windows file names or even file paths is a different issue. A simple file name, as in <xsl:param name="sd" select="'datafile.xml'"/> plus then using doc($sd) should work fine. For paths, either relative or absolute, use URLs paths e.g. <xsl:param name="if" select="'config/datafile2.xml'"/>, then using e.g. doc($if)) should work.

Passing those values in on the command line might require escaping, but how exactly depends the command shell, e.g. command prompt or Powershell.

It's always a bit difficult to respond to an email that says "I tried everything and nothing worked". It's always easier if you give exact details of one thing you tried and exact details of how it failed.

I would always recommend declaring the type of a parameter, for example <xsl:param name="sd" as="xs:string"/>. That's mainly for improved diagnostics; if you supply an inappropriate value, you'll get a clearer error message.

Supplying a string value for a parameter on the command line is straightforward, for example sd=my.xml. The rules of the document() function are that if this is a relative URI, it will be resolved relative to the location of the stylesheet (not the current directory).

There's another option which is to supply a (parsed) document rather than a string. In that case you would declare <xsl:param name="sd" as="document-node()"/>, you then don't need to call the document() function, and you can supply the parameter on the command line using +sd=my.xml. In this case, the relative filename is interpreted relative to the current directory.