=== modified file 'lisp/nxml/nxml-mode.el'
--- lisp/nxml/nxml-mode.el	2009-09-24 23:22:17 +0000
+++ lisp/nxml/nxml-mode.el	2009-10-24 21:32:19 +0000
@@ -1254,29 +1254,31 @@
 
 (defun nxml-balanced-close-start-tag (block-or-inline)
   (let ((token-end (nxml-token-before))
-	(pos (1+ (point))))
+	(pos (1+ (point)))
+	(token-start xmltok-start))
     (unless (or (eq xmltok-type 'partial-start-tag)
 		(and (memq xmltok-type '(start-tag
 					 empty-element
 					 partial-empty-element))
 		     (>= token-end pos)))
       (error "Not in a start-tag"))
+    ;; Note that this insertion changes xmltok-start.
     (insert "></"
 	    (buffer-substring-no-properties (+ xmltok-start 1)
 					    (min xmltok-name-end (point)))
 	    ">")
     (if (eq block-or-inline 'inline)
 	(goto-char pos)
-      (goto-char xmltok-start)
+      (goto-char token-start)
       (back-to-indentation)
-      (if (= (point) xmltok-start)
+      (if (= (point) token-start)
 	  (let ((indent (current-column)))
-	  (goto-char pos)
-	  (insert "\n")
-	  (indent-line-to indent)
-	  (goto-char pos)
-	  (insert "\n")
-	  (indent-line-to (+ nxml-child-indent indent)))
+	    (goto-char pos)
+	    (insert "\n")
+	    (indent-line-to indent)
+	    (goto-char pos)
+	    (insert "\n")
+	    (indent-line-to (+ nxml-child-indent indent)))
 	(goto-char pos)))))
 
 (defun nxml-finish-element ()