The 74x138 is easy to use; seldom it is the cause of problems.

Schematics and LCD partnubmers would help but I suspect the problem you are seeing is due to the address and data multiplexing of A0-A7. If you use A0 at the latch instead of the microcontroller, you'll get a clean A0 signal. Remember that the Port 0 requires pullup resistors. Anything from a 4.8K to a 2.2K should work fine.

If you are using a '138, you are either using a cookbook circuit or you require external memory in your circuit. If not, you might be able to toss it and control the LCD by programming the control lines directly. (We call this bit-banging as its the most basic way to do things since it utilizes no built-in support).

The 8051 is rather confusing in this area. It is hard to learn the difference between 16bit addressing, P2 direct addressing, and no parallel data busing. It can do all well, if you invest the time to learn it.

Good luck on the project. If you have a schematic you'd like me to look at (I'm a digital engineer) email it me.

aka J