Try adding a Web Requst Timeout in Host, Host Settings, Advanced Settings, Proxy Settings.

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.