I am having the same error as described above. I have tried changing the timeout in the proxy settings to first 600, and then 60000 and the issue is not resolved.
When I have the XML source set to a local file it works just fine, but when I have it set to remote (URL) it will not perform XPath requests.
Example:
I can have an XML in a remote location (URL) and use the xsl statement as follows and it works fine:
<xsl:for-each select="/guild/members/member">
<xsl:value-of select="name" /><xsl:text> </xsl:text>
</xsl:for-each>
However, if I use a statement like this it will return no data elements.
<xsl:for-each select="/guild/members/member[guildRank='Knight']">
<xsl:value-of select="name" /><xsl:text> </xsl:text>
</xsl:for-each>
The same exact xslt file, when used on a local xml file works just fine.