Thanks for your comments.

Can you give us a schematic also?

Unfortunately, can't provide one because it is in an old OrCad format that I couldn't import.

I guess there's a lot of arcings when the relay contacts open??? Maybe this is already the cause of your malfunctionings!

There are no arcing as the switched current is small. However some people use this relays to activate bigger relays which most probably generate arcs at their contacts when switch on and off. In this case my board is likely to lock itself up.

3. You connect signals to the board, that are not filtered. For instance the input voltage of 5V regulator, connected to "RConn", can unmolestedly run across the whole board. If EMI like high frequency interference or ESD is hitting this line, then it must interfere the whole board!

That's something that I am aware of. That will be a major improvement in my next design.

4. A major mistake of your board is, that cables leave it at different, yes even opposite locations. These means, that any EMI that is coupled into a cable can run across the whole board! This can even be problematic with a mulitlayer board containing a solid ground plane. But with a double sided board this is deadly.

Interesting. Never looked at it this way. Seems I need to re-arrange everything. Or lets say design it from scratch.

5. You need proper supply voltage decoupling at EACH chip. A 100nF/X7R at each chip is a must! Also, supply voltage decoupling cannot work properly without solid ground plane!
For the same reason, don't use the 8052 in DIL40 package. This package is difficult to decouple. Use at least PLCC44 package. I always use TQFP44 package in combination with ISP programming.

My next design will be based on a PLCC44 xRE2.
I have 100n decouplers for each IC plus 4.7u tantals in different places. Actually, decoupling is one of the few things that I did completely right! :)

This post along with other posts in this thread were an eye-opener for me. I'd like to thank everyone for their help and looking forward for more comments.