Here are some suggestions:
1. The latest flip I have tested is 1.4.9. Using this version ?

2. You have rx of the 8051 connected to rs232 chip (such as max202 family), which goes to PC tx (DE9 pin 3) ?

3. You have tx of the 8051 connected to rs232 chip (such as max202 family), which goes to PC rx (DE9 pin 2) ?

4. You put the 8051 into reset, and remove it from reset, while EA is low and ALE is floating. ?

5. You do not use external watchdog. ?

Test your connections using Hyperterminal(or equivalent) at 9600,n,8,1, no handshake. The 8051 should respond to "U" with a "U". You should be able to scope or use logic probe to prove these signals are occuring at 8051 rx and tx pins.