I assume you're powering off the MCF52259's Vdd supply.
From the Data Sheet:
Table 4. Absolute Maximum Ratings
Note 4: All functional non-supply pins are internally clamped to VSS and VDD.
And you're not meant to supply voltage on any pin above the level on the Vdd pin. Or at least (and this is well specified on this chip) you can, but you have to current-limit it to the "instantaneous Maximum Current" limit.
> On one side of the 4.7K I have 2.77V and on the other side 1.25V.
I think you'll find that the Vdd pin is at about 0.6V too, so that's one diode drop from the CS pins to VDD and something is drawing current from Vdd to bring it close to ground.
> Is there anything I can do to make the chip selects power down?
Don't remove Vdd, but put the CPU into Stop Mode 3 where it it documented to draw 150uA. But that's too much for your circuit.
> Should I re-spin and put diodes in series?
How's that going to help? it will still be conducting to the Vdd pin.
You need to put that multiplexer (or equivalent gates) back. You could also use an "analog switch" chip.
Tom