Keil debugger problem

I am working on a design contest entry and I am having trouble with the debugger. Unless I am doing something really wrong, it looks like the debugger has some very serious issues.

When I am single stepping code the debugger is very slow. I guess that is more an issue with the the FTDI USB interface than the debugger.

When I view local variables in the local watch window, they sometimes change value even when they are not being acted upon. I looked at the assembly output and it seems that the compiler will move a local from one register to another. When that happens, the debugger does not keep up and displays the old register. This makes it very hard to tell if the code is wrong or if it is a debugger error.

I have also seen the debugger just plain not display a local variable in the local window. I can't add it to the regular watch window either. It is tough to use a debugger that won't show you variable info.

Anyone else see this or is my debugger old or something? I am using the tools straight off the contest CD.