master.xml

<data>
  <projects>
    <entry id="1">paste your xml here 1</entry>
    <entry id="2">paste your xml here</entry>
    <entry id="3">paste your xml here</entry>
    <entry id="4">paste your xml here</entry>
    <entry id="5">paste your xml here</entry>
    <entry id="6">paste your xml here</entry>
    <entry id="7">paste your xml here</entry>
    <entry id="8">paste your xml here</entry>
    <entry id="9">paste your xml here</entry>
    <entry id="10">paste your xml here</entry>
    <entry id="11">paste your xml here</entry>
    <entry id="12">paste your xml here 12</entry>
  </projects>
</data>

master.xsl

<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform" version="1.0">

  <xsl:output method="xml" indent="yes" />

  
  
  <xsl:template match="/">
    <div class="contentwrapper">
      <xsl:apply-templates select="data/projects"/>
    </div>
  </xsl:template>
  
  <!-- Declare a key to identify each group of 3 elements -->
  <xsl:key name="positionKey" match="//data/projects/entry" use="floor((position() - 2) div 2)"/>
  <xsl:template match="data/projects">
        
            <!-- Iterate over the first element in each group -->
            <xsl:for-each select="entry[(position() - 1) mod 2 = 0]">
                <ul>
                    <!-- Grab all elements from this group -->
                    <xsl:apply-templates select="key('positionKey', position()-1)"/>
                </ul>
            </xsl:for-each>
        
    </xsl:template>

    <xsl:template match="entry">
        <li><xsl:value-of select="."/></li>
    </xsl:template>
  
</xsl:stylesheet>