This was by design, but my mistake was calling it a "default value" I should have called it "example value" or "placeholder value". I'll fix this soon to make it more clear and maybe add a real "default value" feature.

To fix this, just remove the "defaultValue" class from the input tag. This is what the javascript is looking for to clear it out.

<xsl:variable name="className">
    <xsl:text>pText</xsl:text>
    <xsl:if test="string-length(class) &gt; 0">
      <xsl:text> </xsl:text>
      <xsl:value-of select="class" />
    </xsl:if>
    <!--<xsl:if test="string-length(defaultValue) &gt; 0">
      <xsl:text> defaultValue</xsl:text>
    </xsl:if>-->
    <xsl:if test="string(required) = '1'">
      <xsl:text> pRequiredText</xsl:text>
    </xsl:if>
</xsl:variable>