The better solution is to encapsulate the data like so:
Code:
<?xml version="1.0" ?>
<?xml-stylesheet type="text/xsl" href="mystyle.xsl" ?>
<reportpage>
<name>Bid Administration Report Summary</name>
<htmldata> <![CDATA[ <b>abcd></b> should appear bold. any html tags can appear here. ]]></htmldata>
</reportpage>
As, technically speaking, you are not adding a <b> element to the <htmldata> block, but rather adding data - so a CDATA section is preferred.
... but if you really wanted to keep it how you have it, just replace
Code:
<xsl:value-of select="htmldata" disable-output-escaping="yes" />
with
Code:
<xsl:copy-of select="htmldata" />
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