Hi Munish,
Here are the possible answers:


Remember for MCS51 using Keil:
RAM usage is totally dependant upon the number and type of variable(s) you have defined.
Stack is an important place that is initialized by Keil. Preferably at Address:0x80 for MCS51 having RAM>=256 bytes. Stack uses uses RAM:0x80~0xFF.
So 89S52 has 256 bytes of RAM, 128 are gone for Stack, that leaves 128 bytes for your variables.
"Char" takes 1 byte, "int" takes 2 bytes...etc.

Now you can think your declaration:
unsigned char image_buffer[504]
where will it be stored?...so no memory left. You have less than 128 bytes left. So that answers the error message.



When you specify any variable as char, int long, float, double it is in RAM (also called as Data Memory) If you initialize it as "xdata char", "xdata int", etc. they are allocated a space in the XRAM. Now this XRAM can be physical external RAM mounted on the board alongwith MCS51 or some flavours of MCS51 have internal XRAM. Anyway, internal XRAM or External XRAM, variables defined with xdata are defined in XRAM area.
You can steal some memory from stack(128 bytes) by declaring the variable as "idata char",etc. But do not use more number of varibales for idata. It might cause insufficient area for stack and your product software will crash. If you are novice: Try to avoid "idata" as much as possible.




Look into the data sheet of 89V51RD2, look at the amount of internal XRAM it has. Well you have to play within that amount of RAM. To define a variable in this XRAM, define it as "xdata unsigned char image_buffer[xxx]'. If you feel that 504 bytes will not fit, in 89V51RD2, then look out for some another flavour of MCS51 that has more amount of Internal XRAM.
I could have answered your question directly, but I want you to read the datasheet. I have shown you the way...now walk!!!