Try:

(chdir "libxsl")

The reason for this suggestion is that "source" is already
traversed/changed-to after "unpack" phase. Because Guix already tries to
change to first directory it finds in the source.

If it still doesn't work, revert the one I just recommended, and add:

... before the "configure" phase:

(display (string-append "Current working directory before configure phase is: "
                        (getcwd) "\n"))

This line will print which directory is being worked on before the error.