FM 12 xslt preprocessing

Hi,

I've got an XML application that works w/o problems on FM9 and FM 11, but not in FM 12. If my structapps does not have any preprocessing XSLT, everything works. But if it has, XSLT processor (Xalan used, not Saxon HE), XSLT processor gives me error: java.io.FileNotFoundException: Could not find file: <path_to_source_xml>\dtd_file, so it looks like xalan cannot resolve the public identifier and tries to locate dtd  from same folder. I have declared the entity locations with public ID + path\filename in structapps (and uses default API client).

What might be wrong?

Thanks in advance,

Martti