Quartus filters out essential parts of state machine?

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The synthesisor will remove code if it determines it is unused, or states that it thinks are unreachable. Without the code we cannot really comment - but did you simulate the design before putting it on a baord?

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Yes, I put it through simulation, it fails with same thing as board, which is at least promising :)

Exactly the same code works fine in different project..

I will attach project when I get home..

(it is for quartus 9, my board is very old)

thanks,

Evgeny.