It seems like I hit the problem previously reported in
http://www.xemacs.org/list-archives/xemacs-beta/200009/msg00153.html
Note that this is in Xemacs 21.1.
Adding ':' to the list of characters as follows, gets rid of the error.
glebīŧ one 9 % diff -c psgml-parse.el~ psgml-parse.el
*** psgml-parse.el~     Fri Oct  6 01:38:12 2000
--- psgml-parse.el      Fri Nov 10 15:32:29 2000
***************
*** 291,297 ****
  (mapconcat (function (lambda (c)
             (modify-syntax-entry c "w" sgml-parser-syntax)))
!          "ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrtsuvwxyz" "")
  (mapconcat (function (lambda (c)
                       (modify-syntax-entry c "_" sgml-parser-syntax)))
           "-.0123456789" "")
--- 291,297 ----
  (mapconcat (function (lambda (c)
             (modify-syntax-entry c "w" sgml-parser-syntax)))
!          ":ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrtsuvwxyz"
"")
  (mapconcat (function (lambda (c)
                       (modify-syntax-entry c "_" sgml-parser-syntax)))
           "-.0123456789" "")
Backtrace
Signaling: (error "Name expected; at: :lang    NMT")
  signal(error ("Name expected; at: :lang    NMT"))
  cerror("Name expected; at: %s" ":lang    NMT")
  apply(cerror ("Name expected; at: %s" ":lang    NMT"))
  error("Name expected; at: %s" ":lang    NMT")
  apply(error "Name expected; at: %s" ":lang    NMT")
  sgml-error("Name expected; at: %s" ":lang    NMT")
  apply(sgml-error "Name expected; at: %s" ":lang    NMT")
  sgml-parse-error("Name expected")
  sgml-check-declared-value()
  sgml-parse-attribute-definition()
  sgml-declare-attlist()
  sgml-parse-markup-declaration(dtd)
  sgml-check-dtd-subset()
 
sgml-compile-dtd("/home/gleb/local/xemacs-packages/etc/psgml/xhtml1-transitional.dtd"
"/home/gleb/local/xemacs-packages/etc/psgml/cdtd/xhtml1-transitional" nil)
 
sgml-bdtd-load("/home/gleb/local/xemacs-packages/etc/psgml/cdtd/xhtml1-transitional"
"/home/gleb/local/xemacs-packages/etc/psgml/xhtml1-transitional.dtd" nil)
  sgml-try-merge-special-case("-//W3C//DTD XHTML 1.0 Transitional//EN//"
"/home/gleb/local/xemacs-packages/etc/psgml/xhtml1-transitional.dtd"
"/home/gleb/local/xemacs-packages/etc/psgml/cdtd/xhtml1-transitional" nil)
  sgml-try-merge-compiled-dtd("-//W3C//DTD XHTML 1.0 Transitional//EN"
"/home/gleb/local/xemacs-packages/etc/psgml/xhtml1-transitional.dtd")
  sgml-push-to-entity(("HTML" dtd ("-//W3C//DTD XHTML 1.0
Transitional//EN" nil. "/home/gleb/") nil))
  sgml-setup-doctype("HTML" ("-//W3C//DTD XHTML 1.0 Transitional//EN"
nil . "/home/gleb/"))
  sgml-do-doctype()
  sgml-parse-markup-declaration(prolog)
  sgml-parse-prolog()
  sgml-load-doctype()
  sgml-need-dtd()
  sgml-parse-to(62)
  #<compiled-function nil "...(23)" [sgml-throw-on-warning push-mark
sgml-note-change-at sgml-parse-to trouble (sgml-parse-until-end-of nil t) message
"Ok"] 3 ("/home/gleb/local/xemacs-packages/lisp/psgml/psgml-edit.elc"
. 10031) nil>()
  call-interactively(sgml-next-trouble-spot)
XEmacs psgml package version 1.20
Emacs : XEmacs 21.1 (patch 3) "Acadia" [Lucid] (sparc-sun-solaris2.6)
of Tue Aug 3 1999 on fsui02 
Package: psgml.el 1.2.1
current state:
==============
(setq
 major-mode 'list-packages-mode
 sgml-always-quote-attributes t
 sgml-auto-activate-dtd nil
 sgml-auto-insert-required-elements t
 sgml-balanced-tag-edit t
 sgml-catalog-files '("CATALOG"
                      "/home/gleb/local/xemacs-packages/etc/psgml/CATALOG")
 sgml-declaration nil
 sgml-doctype nil
 sgml-ecat-files '("ECAT" "~/sgml/ECAT"
                   "/home/gleb/local/xemacs-packages/etc/psgml/ECAT")
 sgml-indent-data nil
 sgml-indent-step 2
 sgml-leave-point-after-insert nil
 sgml-live-element-indicator nil
 sgml-local-catalogs nil
 sgml-local-ecat-files nil
 sgml-markup-faces '((start-tag . bold) (end-tag . bold) (comment . italic)
                     (pi . bold) (sgml . bold) (doctype . bold)
                     (entity . bold-italic) (shortref . bold))
 sgml-minimize-attributes nil
 sgml-normalize-trims t
 sgml-omittag t
 sgml-omittag-transparent nil
 sgml-parent-document nil
 sgml-public-map '("%S"
"/home/gleb/local/xemacs-packages/etc/psgml%o/%c/%d")
 sgml-set-face nil
 sgml-shorttag t
 sgml-namecase-general t
 sgml-tag-region-if-active t
 )