MSBuild XslTransformation Whitespace Issue

Project to reproduce dotnet/msbuild!7671.

How to run:

clone this repository
execute dotnet run

What happens: Two .proto files are generated:

Program.cs uses xsl/fdl2proto.xsl on GreetingProvider.sila.xml to generate GreetingProviderExpected.proto
MSBuildXslTransformationIssue.csproj uses xsl/fdl2proto.xsl on GreetingProvider.sila.xml to generate GreetingProviderMSBuild.proto

What I expect: Both files have the same content.

What actually happens: MSBuild does not correctly output whitespace