XQuery: Unable to resolve sql:variable('%.*ls'). The variable must be declared as a scalar TSQL variable.

Error Message:
Msg 9501, Level 16, State 2, Line 4
XQuery: Unable to resolve sql:variable('%.*ls'). The variable must be declared as a scalar TSQL variable.

Severity level:
16.

Description:
This error message appears when in an XQuery a variable cannot be resolved to a valid TSQL variable.

Consequences:
The T-SQL statement can be parsed, but causes the error at runtime.

Resolution:
Errors of the Severity level 16 are generated by the user and are corrigible by the user. The statement cannot be run this way. A sql:variable in a XQuery must be resolvable to a valid TSQL variable.

Versions:
This error message was introduced with SQL Server 2005.

Example(s):
DECLARE @xml xml;
SET @xml = '';

SELECT @xml.query( N'
/foo[position()=sql:variable("@index")]
 ')

Remarks:
In the above example we try to use the XQuery sql:variable @index. However this variable is not declared on the TSQL level. This raises the error.