I did a couple of searches and found some references to the problems I am having. But I don't think this is fully addressed, so I'll ask here.
I am using the contest eval board from Luminary Micro that includes an eval copy of the Keil tools for the Cortex-M3. I have seen variables in the local watch window display the wrong value as I step through a program. There are a couple of threads here from last summer about this, so I guess this is a known (and fixed) problem. I am surprised they circulated an old version of the tools for this contest. I just got my board in early December.
The other problem is that in one case, I was not able to view a variable in a watch window. It was a local variable and did not show in the Locals window. I also could not add it to the other Watch windows. This variable was being used, so it should not have been optimized away. I was compiling at optimization level 0, so that should not be the problem. Is this a known problem? Is it fixed in a current version of the tools?