diff --git a/XMLCONF b/XMLCONF
index a9b3f27..832d8e8 100644
--- a/XMLCONF
+++ b/XMLCONF
@@ -157,21 +157,9 @@ xmltest/not-wf/sa/156.xml [not-wf?] not-wf
 xmltest/not-wf/sa/157.xml [not-wf?] not-wf
 xmltest/not-wf/sa/158.xml [not-wf?] not-wf
 xmltest/not-wf/sa/159.xml [not-wf?] not-wf
-xmltest/not-wf/sa/160.xml [not-wf?] FAILED:
-  well-formedness violation not detected
-[
-    Violates the  WFC
-    by using a PE reference within a declaration. ]
-xmltest/not-wf/sa/161.xml [not-wf?] FAILED:
-  well-formedness violation not detected
-[
-    Violates the  WFC
-    by using a PE reference within a declaration. ]
-xmltest/not-wf/sa/162.xml [not-wf?] FAILED:
-  well-formedness violation not detected
-[
-    Violates the  WFC
-    by using a PE reference within a declaration. ]
+xmltest/not-wf/sa/160.xml [not-wf?] not-wf
+xmltest/not-wf/sa/161.xml [not-wf?] not-wf
+xmltest/not-wf/sa/162.xml [not-wf?] not-wf
 xmltest/not-wf/sa/163.xml [not-wf?] not-wf
 xmltest/not-wf/sa/164.xml [not-wf?] not-wf
 xmltest/not-wf/sa/165.xml [not-wf?] not-wf
@@ -1108,26 +1096,11 @@ ibm/not-wf/P28/ibm28n08.xml [not-wf?] not-wf
 ibm/not-wf/p28a/ibm28an01.xml [not-wf?] not-wf
 ibm/not-wf/P29/ibm29n01.xml [not-wf?] not-wf
 ibm/not-wf/P29/ibm29n02.xml [not-wf?] not-wf
-ibm/not-wf/P29/ibm29n03.xml [not-wf?] FAILED:
-  well-formedness violation not detected
-[
-    Tests WFC "PEs in Internal Subset". A PE reference occurs inside an   
-    ATTlistDecl in the DTD. 
-  ]
-ibm/not-wf/P29/ibm29n04.xml [not-wf?] FAILED:
-  well-formedness violation not detected
-[
-    Tests WFC "PEs in Internal Subset". A PE reference occurs inside an   
-    EntityDecl in the DTD. 
-  ]
+ibm/not-wf/P29/ibm29n03.xml [not-wf?] not-wf
+ibm/not-wf/P29/ibm29n04.xml [not-wf?] not-wf
 ibm/not-wf/P29/ibm29n05.xml [not-wf?] not-wf
 ibm/not-wf/P29/ibm29n06.xml [not-wf?] not-wf
-ibm/not-wf/P29/ibm29n07.xml [not-wf?] FAILED:
-  well-formedness violation not detected
-[
-    Tests WFC "PEs in Internal Subset". A PE reference occurs inside a   
-    NotationDecl in the DTD. 
-  ]
+ibm/not-wf/P29/ibm29n07.xml [not-wf?] not-wf
 ibm/not-wf/P30/ibm30n01.xml [not-wf?] not-wf
 ibm/not-wf/P31/ibm31n01.xml [not-wf?] not-wf
 ibm/not-wf/P32/ibm32n01.xml [not-wf?] not-wf
@@ -1348,20 +1321,8 @@ ibm/not-wf/P69/ibm69n01.xml [not-wf?] not-wf
 ibm/not-wf/P69/ibm69n02.xml [not-wf?] not-wf
 ibm/not-wf/P69/ibm69n03.xml [not-wf?] not-wf
 ibm/not-wf/P69/ibm69n04.xml [not-wf?] not-wf
-ibm/not-wf/P69/ibm69n06.xml [not-wf?] FAILED:
-  well-formedness violation not detected
-[
-    Tests PEReference which is against P69 WFC: No Recursion. The 
-    recursive PE reference occurs with the entity declarations for "paaa" and 
-    "bbb" in the DTD. 
-  ]
-ibm/not-wf/P69/ibm69n07.xml [not-wf?] FAILED:
-  well-formedness violation not detected
-[
-    Tests PEReference which is against P69 WFC: No Recursion. The 
-    indirect recursive PE reference occurs with the entity declarations for 
-    "paaa", "bbb", "ccc", "ddd", and "eee" in the DTD.
-  ]
+ibm/not-wf/P69/ibm69n06.xml [not-wf?] not-wf
+ibm/not-wf/P69/ibm69n07.xml [not-wf?] not-wf
 ibm/not-wf/P71/ibm70n01.xml [not-wf?] not-wf
 ibm/not-wf/P71/ibm71n01.xml [not-wf?] not-wf
 ibm/not-wf/P71/ibm71n02.xml [not-wf?] not-wf
@@ -2424,4 +2385,4 @@ ibm/valid/P86/ibm86v01.xml [not validating:] input [validating:] input
 ibm/valid/P87/ibm87v01.xml [not validating:] input [validating:] input
 ibm/valid/P88/ibm88v01.xml [not validating:] input [validating:] input
 ibm/valid/P89/ibm89v01.xml [not validating:] input [validating:] input
-129/1786 tests failed; 376 tests were skipped
\ No newline at end of file
+121/1786 tests failed; 376 tests were skipped
\ No newline at end of file
diff --git a/xml/xml-parse.lisp b/xml/xml-parse.lisp
index c259455..a57e917 100644
--- a/xml/xml-parse.lisp
+++ b/xml/xml-parse.lisp
@@ -2390,17 +2390,19 @@
   ;; markupdecl ::= elementdecl | AttlistDecl       /* VC: Proper Declaration/PE Nesting */
   ;;              | EntityDecl | NotationDecl
   ;;              | PI | Comment               /* WFC: PEs in Internal Subset */
-  (case (peek-token input)
-    (:|<!ELEMENT|  (p/element-decl input))
-    (:|<!ATTLIST|  (p/attlist-decl input))
-    (:|<!ENTITY|   (p/entity-decl input))
-    (:|<!NOTATION| (p/notation-decl input))
-    (:PI
-      (let ((sem (nth-value 1 (read-token input))))
-        (sax:processing-instruction (handler *ctx*) (car sem) (cdr sem))))
-    (:COMMENT      (consume-token input))
-    (otherwise
-     (error "p/markup-decl ~S" (peek-token input)))))
+  (let ((token (peek-token input))
+	(*expand-pe-p* (and *expand-pe-p* *markup-declaration-external-p*)))
+    (case token
+      (:|<!ELEMENT|  (p/element-decl input))
+      (:|<!ATTLIST|  (p/attlist-decl input))
+      (:|<!ENTITY|   (p/entity-decl input))
+      (:|<!NOTATION| (p/notation-decl input))
+      (:PI
+	(let ((sem (nth-value 1 (read-token input))))
+	  (sax:processing-instruction (handler *ctx*) (car sem) (cdr sem))))
+      (:COMMENT      (consume-token input))
+      (otherwise
+	(error "p/markup-decl ~S" (peek-token input))))))
 
 (defun setup-encoding (input xml-header)
   (when (xml-header-encoding xml-header)