need a couple more flag locations to run my program. I was using PSW.1 and PSW.5 on the 552, but judging from my (lack of) results that doesn't seem like a great idea now. PCON.2 and PCON.3 also appear available (General Purpose Flags) but they, too, seem to be getting disrupted as the program runs.

Can I just choose upper memory locations and use them as flags instead, like "SETB 07EH" ?? Is that an acceptable method, or are there flag bits somewhere else I don't know about?
C compilers tend to like the flagbits you are referring to since they are not supposed to be known by C programmers. That is probably the reason you have problems retaining them. on that subject, I would be surprised if some of these were not derivative dependent.

You can only use SETB for the bit area and SFRs xx0 and xx8
Why not a byte flag ) or not?.

Erik