Using the AT89C51RC the microvision2 target selection window says there is 1KB of on-chip XRAM available but the data sheet says 256 Bytes. I am having trouble using the XDATA and I don't know how to resolve the discrepancy. I see other chips have problems with the reset value of AUXR register and I don't know if this could be causing problems also. Is anyone using the XRAM on this chip successfully and if so is there a trick to it.
It looks like you are using an older version of the tools. In the current version the on-chip XRAM is configure with 256 bytes. For using on-chip XRAM take a look to: http://www.keil.com/support/docs/1978.htm
We had a similar problem with an early version of your chip. I'm sorry I don't remember the chip step number but the symptom was enable XRAM with AUXR and lose ability to address memory mapped device as XDATA. We contacted the local FAE and he replaced our chips with a later version that corrected the problem. With XRAM disabled we could address all our memory mapped I/O in XDATA. Our XDATA and XRAM were not overlapped.