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The XML mapping rules for attribute source declarations which occur within complexType or attributeGroup elements specify that if the attribute is qualified, the value of its {target namespace} property comes from "the actual value of the targetNamespace [attribute] of the parent <schema> element information item, or absent if there is none". Since such an attribute declaration can never have a parent element of type xsd:schema, there can never be a targetNamespace attribute belonging to such a parent schema element. It follows that all local attributes declared as form = qualified are required by 1.0 and the current draft of 1.1 to be unqualified. Both 1.0 and 1.1 should be corrected to refer to the ancestor schema element, rather than the parent. (The editors should probably scan for other instances of this, since it looks like a copy-paste error.)
The phrase " the ·actual value· of the targetNamespace [attribute] of the parent <schema> element information item, or ·absent· if there is none" also appears unnecessarily complex. If there is no targetNamespace attribute, its value is absent, is it not? And if so, then we can safely say simply "the ·actual value· of the targetNamespace [attribute] of the ancestor <schema> element information item" for this part of the mapping rule.
(In reply to comment #1) > The phrase " the ·actual value· of the targetNamespace > [attribute] of the parent <schema> element information > item, or ·absent· if there is none" also appears > unnecessarily complex. If there is no targetNamespace > attribute, its value is absent, is it not? This may be an accurate quote from SQ, but the current style is "...or absent if...", where "absent" is the preterminal/ constant named 'absent'. So I'd read the words you object to as simply telling me what value use if there is no such attribute. Seems perfectly reasonable to me.
A proposal to resolve this issue has been placed at http://www.w3.org/XML/Group/2004/06/xmlschema-1/structures.cleanup-1.200610.html (member-only link) for review and action by the WG.
The proposal mentioned in comment #3 has been approved by the WG and integrated into the status-quo text of the spec. It should be included in due course in the next public working draft.