Sorry, it just toggles a bit. Sloppy thinking on my part.
Complete source code is as follows;

#include <DS89C4xx.h>

void initSerialPorts(void){
	TMOD =0x20;//put timer 1 into mode 2
	TH1=247;//value to set timer to after it rolls over
	TL1=247;
	EWDI=0;//disable the watchdog interrupt
	TR1=1;//start timer 1 running
	PCON = 0x80;//double clock for UART0
	TB8_0=0;//9th data bit
	SCON0= 0x50;//put serial port 0 into mode 1 and enable receive interrupt
	ES0=1;//enable serial port interrupts
	EA=1;//enable interrupts
	return;
	P1&=0xF7;//light red LED
}

void serial1Service(void) interrupt 4{
	if(RI_0==1){
		RI_0=0;
	}
	if(TI_0==1){
		TI_0=0;
	}
}

main()
{
	unsigned char x=0x01;
	P1&=0xFE;//complete green LED circuit
	initSerialPorts();
	SBUF0=0x41;
	while(1);
}

The variant I'm using has 256 bytes of on-chip RAM; I didn't think that there's enough going on to corrupt the stack.
The simulator's perfectly happy.

Thanks again,
Bob Robertson.