XSL character escape problem

I am writing this because I have really hit the wall and cannot go ahead. In my database I have escaped HTML like this: "<p>My name is Freddy and I was".

I want to show it as HTML OR strip the HTML tags in my XSL template. Both solutions will work for me and I will choose the quicker solution.

I have read several posts online but cannot find a solution. I have also tried disable-output-escape with no success. Basically it seems the problem is that somewhere in the XSL execution the engine is changing this <p> into this: <p>.

It is converting the & into &. If it helps, here is my XSL code. I have tried several combinations with and without the output tag on the top.

Any help will be appreciated. Thanks in advance.

<?xml version="1.0" encoding="utf-8"?>
<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform">

  <xsl:output method="html" omit-xml-declaration="yes"/>

  <xsl:template match="DocumentElement">
    <div>
      <xsl:attribute name="id">mySlides</xsl:attribute>
      <xsl:apply-templates>
        <xsl:with-param name="templatenumber" select="0"/>
      </xsl:apply-templates>
    </div>

    <div>
      <xsl:attribute name="id">myController</xsl:attribute>
      <xsl:apply-templates>
        <xsl:with-param name="templatenumber" select="1"/>
      </xsl:apply-templates>
    </div>
  </xsl:template>

  <xsl:template match="DocumentElement/QueryResults">
    <xsl:param name="templatenumber">tobereplace</xsl:param>

    <xsl:if test="$templatenumber=0">
      <div>
        <xsl:attribute name="id">myController</xsl:attribute>
        <div>
          <xsl:attribute name="class">article</xsl:attrib