Answer

Below is the xslt which will set the empty element attribute xsi:nil="true".

<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" version="1.0">
    <xsl:template match="*">
        <xsl:choose>
            <xsl:when test="count(*|text()[string-length(normalize-space(.))>0])">
                <xsl:copy>
                    <xsl:apply-templates/>
                </xsl:copy>
            </xsl:when>
            <xsl:otherwise>
                <xsl:copy>
                    <xsl:attribute name="xsi:nil">true</xsl:attribute>
                    <xsl:value-of select="."/>
                </xsl:copy>
            </xsl:otherwise>
        </xsl:choose>
    </xsl:template>
    <xsl:template match="text()[string-length(normalize-space(.))>0]">
        <xsl:value-of select="normalize-space(.)"/>
    </xsl:template>
    <xsl:template match="text()"/>
</xsl:stylesheet>

for example if the my xml file is as below

<?xml version="1.0" encoding="UTF-8"?>
<Test_Nill>
   <Records>
        <LastName>LastName</LastName>
        <FirstName>FirstName</FirstName>
        <MobileNo>MobileNo</MobileNo>
        <EMailAddr></EMailAddr>
        <Address>asdfasd</Address>
     </Records>
  </Test_Nill>

As you can see that  <EMailAddr></EMailAddr> is empty and you want to set this field to nillable so that the it becomes  <EMailAddr xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xsi:nil="true" />.
The output of the xslt will be as below

<?xml version="1.0" encoding="UTF-8"?>
<Test_Nill>
   <Records>
        <LastName>LastName</LastName>
        <FirstName>FirstName</FirstName>
        <MobileNo>MobileNo</MobileNo>
<EMailAddr xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xsi:nil="true" />         <Address>asdfasd</Address>
     </Records>
  </Test_Nill>