Hi:
I'm glad you solved your problem.. However I highly recommend you move to 8.0 sp1. or possibly 8.1 when it comes out shortly..
(I know how frustrating it is to be told to upgrade everytime you have an issue). But 8.0 series definitely improved synthesis time dramatically, and it also improved the NIOS IDE build environment, significantly as well.
My biggest gripe since I support multiple customers, each running different version of the Altera tools, is the rate of change on the tools is too high. But the 8.0 step was definitely a step in the right direction.
Pete