XLST Transform does not appear to be working

[#1]

I have an API exposed which takes a JSON payload - I attached a JSON to XML policy which converts the payload - then I have a 'Assign Message' policy as per the following post.

https://community.apigee.com/questions/1684/error-with-xml-transform-javalangstring-cannot-be.html

After that I apply my XSLT - for some reason it never gets applied and I still get the original XML message.My policies as follows

<?xml version="1.0" encoding="UTF-8" standalone="yes"?> <JSONToXML async="false" continueOnError="false" enabled="true" name="JSON-to-XML-2"> <DisplayName>JSON to XML 2</DisplayName> <FaultRules/> <Properties/> <Options> <NullValue>NULL</NullValue> <NamespaceBlockName>#namespaces</NamespaceBlockName> <DefaultNamespaceNodeName>$default</DefaultNamespaceNodeName> <NamespaceSeparator>:</NamespaceSeparator> <TextNodeName>#text</TextNodeName> <AttributeBlockName>#attrs</AttributeBlockName> <AttributePrefix>@</AttributePrefix> <InvalidCharsReplacement>_</InvalidCharsReplacement> <ObjectRootElementName>Root</ObjectRootElementName> <ArrayRootElementName>Array</ArrayRootElementName> <ArrayItemElementName>Item</ArrayItemElementName> </Options> <OutputVariable>SwipboxResponse</OutputVariable> </JSONToXML>

<?xml version="1.0" encoding="UTF-8" standalone="yes"?>
<AssignMessage async="false" continueOnError="false" enabled="true" name="Assign-Message-1">
    <DisplayName>AssignMessage</DisplayName>
  <Description>create a new message</Description>
  <AssignTo createNew='true' type='request'>SwipboxResponse</AssignTo>
  <IgnoreUnresolvedVariables>false</IgnoreUnresolvedVariables>
  <Set>
    <Payload contentType='application/xml'
             variablePrefix='%' variableSuffix='#'>%SwipboxResponse#</Payload>
    <StatusCode>200</StatusCode>
    <ReasonPhrase>OK</ReasonPhrase>
  </Set>
</AssignMessage>

<?xml version="1.0" encoding="UTF-8" standalone="yes"?>
<XSL async="false" continueOnError="false" enabled="true" name="XSL-Transform-1">
    <DisplayName>XSL Transform 1</DisplayName>
    <FaultRules/>
    <Properties/>
    <Source>SwipboxResponse</Source>
    <ResourceURL>xsl://MyXSLT.xsl</ResourceURL>
    <Parameters ignoreUnresolvedVariables="true"/>
</XSL>