Hi Amit,
1. You need to add this .xsl file (in zip format) under Imported Archive.
2. In your Operation Mapping for Response (go to Response Tab) select XSL type Mapping from drop down and refer the XSL from your Imported Archive
3. Your Response Proxy Structure needs to be in the same format/hierarchy as generated in the Response structure (CDATA elements in XML should match with the Response Proxy Structure).
4. The Namespace in XSL should refer to the Response Proxy Data Structure namespace, i.e the one in which you have created your Proxy Structure.
Hope it helps.
Regards,
Azhar