I must be obtuse, I cannot find the new opitimization levels in C51 v7.0. Here are my Help->About stats:
uVision = 2.30 C51 = 7.00 A51 = 7.00a BL51 = 5.00 LIB51 = 4.23 OH51 = 2.6 S8051 = 2.30 DP51 = 2.30
If the linker can't find a library file that it's looking for you'll get an L210 I/O Error. After installing a beta of version 7.0 I had a problem with LX51 crashing when it should have been generating unresolved external errors. Keil suggested a full reinstall as I had applied several updates over the preceding weeks and indeed this fixed the problem.