Copying and moving child node with XSLT

I have this xsl script that transforms an incorrect xml, thereby moving the port children to the correct parent host.

    <xsl:template match="@*|node()">
        <xsl:copy>
            <xsl:apply-templates select="@*|node()"/>
        </xsl:copy>
    </xsl:template>

    <xsl:template match="host">
        <xsl:variable name="hostname" select="@name"/>
        <xsl:copy>
            <xsl:apply-templates select="@*"/>
            <xsl:apply-templates select="//host/port[@parent=$hostname]">
                 <xsl:sort select="@name" data-type="text" />
            </xsl:apply-templates>
        </xsl:copy>
    </xsl:template>

Example of incorrect xml (some ports are not placed under their parent)

    <hosts>
      <host modelID="1" name="H2">
         <port ID="H2.Port1" name="Port1" parent="H2" speed="100"/>
         <port ID="H2.Port2" name="Port2" parent="H2" speed="100"/>
         <port ID="H1.Port1" name="Port1" parent="H1" speed="100"/>
      </host>
      <host modelID="1" name="H1"/>
    </hosts>

Desired output.

    <hosts>
       <host modelID="1" name="H2">
          <port ID="H2.Port1" name="Port1" parent="H2" speed="100"/>
          <port ID="H2.Port2" name="Port2" parent="H2" speed="100"/>
       </host>
       <host modelID="1" name="H1">
          <port ID="H1.Port1" name="Port1" parent="H1" speed="100"/>
       </host>
    </hosts>

Now I want to change the script to include a new element: ports New desired output.

   <hosts>
      <host modelID="1" name="H2">
         <ports>
            <port ID="H2.Port1" name="Port1" parent="H2" speed="100"/>
            <port ID="H2.Port2" name="Port2" parent="H2" speed="100"/>
         </ports> 
       </host>
       <host modelID="1" name="H1">
          <ports>
             <port ID="H1.Port1" name="Port1" parent="H1" speed="100"/>
          </ports>
       </host>
    </hosts>

I was hoping that I would only need to change the line

    <xsl:apply-templates select="//host/port[@parent=$hostname]">

to

    <xsl:apply-templates select="//host/ports/port[@parent=$hostname]">

Why does this not work, and what need I do instead?