In your example, you are trying to use a variable in the definition itself, which is not valid.
In my opinion, you intend to try to change the value of the existing value. However, XSLT is a functional language, and as a result, variables are immutable. This means that you cannot change the value after the definition.
. ,
<func:function name="fn:getXpath">
<xsl:variable name="xpath">
<xsl:for-each select="ancestor-or-self::*">
<xsl:value-of select="name()"/>
<xsl:if test="not(position()=last())">
<xsl:value-of select="'/'"/>
</xsl:if>
</xsl:for-each>
</xsl:variable>
<func:result select="$xpath" />
</func:function>