It sounds like libxml2 is either not installed or the configure script can't find it.
Looking at those instructions, wherever it says "--prefix=/usr/local/", you'll have to change that to something like "--prefix=$HOME/usr".
Then, when you're compiling libxslt, you give it the same directory: "--with-libxml-prefix=$HOME/usr". Then it should be able to find libxml2, and it will compile correctly.
That's my best guess...
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