Меню с вложениями! И разными стилями для подкатегорий.

<?xml version="1.0" encoding="utf-8"?>
<!DOCTYPE xsl:stylesheet>
<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
   <xsl:output xmlns="http://www.w3.org/TR/xhtml1/strict" doctype-public="-//W3C//DTD XHTML 1.0 Strict//EN" encoding="utf-8" indent="yes" method="html" omit-xml-declaration="no" version="1.0" media-type="text/xml"/>
   
   <!-- МагазинГруппыТоваровНаГлавной -->
   
   <xsl:template match="/">
      <xsl:apply-templates select="/shop"/>
   </xsl:template>
   
   <!-- Шаблон для магазина -->
   <xsl:template match="/shop">
      <ul>
         <xsl:apply-templates select="group"/>
      </ul>
   </xsl:template>
   
   <!-- Шаблон для групп товара -->
   <xsl:template match="group">
      <li style="margin-top:1px;">
         <a href="{/shop/path}{fullpath}">
            <xsl:value-of disable-output-escaping="yes" select="name"/>
         </a>
         <xsl:if test="count(group) > 0 and 2 > count(ancestor::group)">
               <ul style="margin-left:15px;">
                  <xsl:apply-templates select="group" style="color:#ff00ff;"/>
               </ul>
         </xsl:if>
      </li>
   </xsl:template>
</xsl:stylesheet>