Issue with XSL in IE9 with Non Breaking Spaces

Issue with IE9, and I'm hoping someone can help out!

We have a web site that applies XSL transformation against an XML
file. It's in ISO-8859-1 encoding. This works perfectly in FireFox,
Chrome, IE6, IE7, and IE8. But in IE9, for some reason the non-
breaking space character displays oddly (a black diamond with a
question mark).

Anybody have any thoughts? As of now, my workaround is to force it
into compatibility mode, which is not a great solution.

Because of other reasons, I can't change the encoding (changing it to
UTF removes the diamonds, but causes additional issues).

Thanks in advance!