I think it's very tricky with just core XSLT, but it's easier with node-set(), a XSLT extension function:
<xsl:template name="add-row">
<xsl:param name="row"/>
<xsl:param name="prev-group" />
<xsl:if test="$row and not($row/@ID = $prev-group/Row/@ID)">
<xsl:copy-of select="$row" />
<xsl:call-template name="add-row">
<xsl:with-param name="row" select="$row/following-sibling::Row[@Spanoffset > $row/@Spantail][1]" />
<xsl:with-param name="prev-group" select="$prev-group" />
</xsl:call-template>
</xsl:if>
</xsl:template>
<xsl:template name="add-group">
<xsl:param name="first-row" />
<xsl:param name="prev-group" select="exsl:node-set(/)" />
<xsl:if test="$first-row">
<xsl:variable name="group">
<xsl:call-template name="add-row">
<xsl:with-param name="row" select="$first-row" />
<xsl:with-param name="prev-group" select="$prev-group" />
</xsl:call-template>
</xsl:variable>
<div clear="both">
<xsl:for-each select="exsl:node-set($group)/Row">
<div style="width: {2*@Span}px; left: {2*@Spanoffset}px"><xsl:value-of select="@ID"/></div>
</xsl:for-each>
</div>
<xsl:call-template name="add-group">
<xsl:with-param name="first-row" select="$first-row/following-sibling::Row[@Spanoffset < preceding-sibling::Row/@Spantail][1]" />
<xsl:with-param name="prev-group" select="exsl:node-set($group)" />
</xsl:call-template>
</xsl:if>
</xsl:template>
<xsl:template match="Rows">
<xsl:call-template name="add-group">
<xsl:with-param name="first-row" select="Row[1]" />
</xsl:call-template>
</xsl:template>
Don't forget to declare extension prefix and namespace in your stylesheet tag:
<xsl:stylesheet
version="1.0"
xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
extension-element-prefixes="exsl"
xmlns:exsl="http://exslt.org/common">
http://exslt.org/common is a valid namespace for Java XSLT processors, such as Xalan or Saxon; if you're using MSXML, use urn:schemas-microsoft-com:xslt instead.