I am running CW 11.1 under Windows 7 64bit with a S08QE12 project.
I have several projects in the workspace and they all compile, build and debug using my Multilink Universal FX. That is - all except one, which always gives an out of memory error (Java heap space, which it tells me is set at 512MB). If I cancel the error windows and decline to close CW it eventually builds (VERY SLOWLY) and debugs. I have re-installed CW and Windows, but it makes no difference. My workspace is on a cloud drive and so I tried it on another computer (my laptop) and it works fine.