Sun, you are patching. Instead, take the bull by the horns and do it all, not "will this bit work, or will this bit work"
Go by ALL the preventive measures in the FAQ entry, not try this, try this.

Also your Measurement" of spikes of tens of volts on your 5V line is erroneous, your chips would be destroyed if you did.

Where is the answer to my request of you scoping between "ground" on your board and "ground" at the sensor? You seem to suffer from the mistaken belief that two ends of a wire is the same.

I "hammer" this point throughout because there is NO WAY your chips would survive the spikes on the 5V line you state.

The reason the PIC board operates fine is that its input operating range is 2 to 5V and the 89S51 is 4 to 5.5V. This may also be the reason my micro stalled and the PIC did not.
Again, please correct me if I am wrong.
You are, the noise immunity for a CMOS circuit is related to the supply volatge, not the supply voltage range (HCT is an exception, but then specified for one Vcc only).

When my board was opperating close to (but not in any way connected to) the pistons while they were being switched by the PIC board, my board still stalled after a while.
so what, it stall anyhow

My plan of action from now is to redesign my PCB layout, and provide my micro and digital cctry with a stable supply using a charge pump, a diode network to clip the negative spike and clipper network to clip the spike at 5V.
1) redesign with 4 layers is great
2) a charge pump, I hope you have a language problem here, using a charge punp would be a disaster.
3) a diode network may be too slow, capacitor, transzorb and diode will do ON THE INPUT SIDE you DO NOT have to "cut spikes" on the 5V side, if you had to, your chips would be dead.

My problem is at the frequency of the spike ie 10Mhz, capacitors have a very low resistance and therefore provide a path to ground when connected in parallel to the supply output.
as should be

I do not understand how the cap can be used as a pump to provide a stable supply when it is providing a path to ground at this frequency.
again, what do you mean by "a pump".

Also for a 5V clipper cct I need to use a 5V cell in series with a fast switching diode. Due the application, the use of the a cell is not an option, is there anything else I can use instead of a cell, a Voltage reference chip perhaps? Is there are any other method I can use to Clip the spike at 5V.
You DO NOT have a spike of tens of volts on the +5, your chips would be destroyed if you did.

And finaly, at 10 MHz will the voltage regulator (LM7805) be stable?
irrelevant

Erik