"recently we have been having major problems"
What did you change?
-Nothing we can think of that could cause the problems, other than that the size of the code has grown, and we are using more of a gap in the code space that the linker directives create. Anyway, since we can duplicate the problems in the original code by removing the linnker directives it seems we are running into the same problem that the linnker directives were a (no longer working) workaround for.

"variables being overwritten for no apparent reason"
Does your toolset use data overlaying?
You would see this sort of symptom if you had messed-up overlaying!
-Our toolset (Franklin ver. 6) uses overlaying by default, turning it off has no effect.

"There is no reason I can think of..."
Doesn't necessarily mean that there is no reason! ;-)
-Actually, I would go so far as to say that there definitely is a reason, we just don't know what it is! ;-)

"I suspect the mess above was a workaround that the person who did the original work did to get around some sort of problem..."
Of course, having suffered the frustration, you will be sure to carefully write it all up and document what you did and why you did it... ;-)
-I would certainly document a situation where linker instructions that have no obvious explanation are needed just to get a system to function (but I'm particular that way) ;-)