Hi
The IAR project is for IAR4. Unfortunately IAR released the IAR5 version which is not compatible - there are a lot of differences (assembler, linker and some C-stuff, including start-up).
See the following for a few extra details:
http://www.utasker.com/forum/index.php?topic=244.0Porting to the IAR5 project is something which is still outstanding.
You may like to compile using GNU (unfortunately IAR has also removed the IAR4 versions from its download site), or Rowley. The Rowley evaluation will allow also full debugging etc. and supports just about all Jtag-debuggers under the sun.
If you are feeling brave, you may be able to identify the missing steps to getting your IAR5 project to run (see the previous post link for some ideas).
I have installed the IAR5 evaluation version so will try to get a solution as soon as time permits.
Regards
Mark