It appears not related to variables. It is something about code. Here is the message
 
Link Error   : L1907: Fixup overflow in set2sqr, to _xxPSID17 type 1, at offset 0x1D
Link Error   : Link failed
 
Compile process is ok. I left the optimization setting as default. Linker file contains contiguous flash & ram memory. Below is the link file contents as well.
 
First time using this suite, so not quite familiar with the options. My parts is R08KA08 which has 8k flash and some 200 byte ram.
 
Kerem
 
NAMES END /* CodeWarrior will pass all the needed files to the linker by command line. But here you may add your own files too. */
SEGMENTS /* Here all RAM/ROM areas of the device are listed. Used in PLACEMENT below. */
    TINY_RAM                 =  READ_WRITE   0x0005 TO 0x000D;
    RAM                      =  READ_WRITE   0x0030 TO 0x00BF;
    RESERVED_RAM             =  NO_INIT      0x0000 TO 0x0004;
    ROM                      =  READ_ONLY    0x2000 TO 0x3FF7;
END
PLACEMENT /* Here all predefined and user segments are placed into the SEGMENTS defined above. */
    RESERVED                 INTO RESERVED_RAM;
    TINY_RAM_VARS            INTO TINY_RAM;
    DIRECT_RAM_VARS          INTO RAM, TINY_RAM;
    DEFAULT_RAM              INTO RAM, TINY_RAM;
    DEFAULT_ROM              INTO ROM;
END
STACKSIZE 0x00 /* no stack for RS08 */
VECTOR 0 _Startup /* Reset vector: this is the default entry point for an application. */