When you invoke key() function and context node is in temporal result tree 
fragment (e.g. constructed by node-set() function), key() function does 
return nothing even there is corresponding node in the source document. See 
attached files for demonstration of error.

--- test.xsl --
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
                xmlns:exsl="http://exslt.org/common"
                extension-element-prefixes="exsl"
                version="1.0">
  
  <!-- Make key for all elements with id attribute -->
  <xsl:key name="id" match="*[@id]" use="@id"/>

  <xsl:template match="/">

    <!-- Copy whole document as RTF into variable -->
    <xsl:variable name="rtf">
      <xsl:copy-of select="."/>
    </xsl:variable>

    <!-- Convert RTF back to nodeset -->
    <xsl:variable name="nodes" select="exsl:node-set($rtf)"/>

    <!-- Apply templates to nodeset -->
    <xsl:apply-templates select="$nodes/*"/>

  </xsl:template>  

  <xsl:template match="link">
    <xsl:text>Target content:</xsl:text>
    <!-- Lookup content of element with specified id in a source document 
-->
    <xsl:value-of select="key('id', @target)"/>
    <!-- And there is error, it prints nothing instead of content of 
referenced element -->
  </xsl:template>

  <xsl:template match="text()"/>

</xsl:stylesheet>

--- test.xml ---
<test>
<link target="b"/>
<section id="b">Foo</section>
</test>