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This test (confusingly named, because it does not actually have an external variable) is: declare variable $v as element(*, xs:untyped?)+ := <e/>; 1 With construction mode preserve, the type of the element will be "anyType" rather than "untyped", so (if the variable is evaluated at all) it will cause a type error XPTY0004, whereas the test expects success.
*** This bug has been marked as a duplicate of bug 6941 ***
This bug is still present in the 1.0.3 version of the test suite.
This bug issue has been fixed in the QT3 test suite therefore I am closing it.