I agree with Michael: the code you show should work - provided that what you posted is actually the same as what you compiled!
eg, a simple typo like this, with optimisation, might correctly give the result you describe:

void foo(unsigned char count) 
{
   while(count--); 
   {
      /* do something here */
   }
}

I have also seen problems in earlier versions of Keil C51 with using a ++ or -- operator inside a while expression - maybe C251 has inherited/resurrected that bug?

PS
Why does my code always come out double-spaced these days?