Could you please publish your changes to the kernel and to the CM7 sources?
It would be nice when you publish your updates on Github. Having the actual source in github may help sorting out the remaining problems.
Thanks in advance,
(the same request has been posted on the treads of Anryl and jollaroi).
You may not realise, but the U8160 kernel sources were published by Huawei in compliance with the GPL after some pressure on Vodafone by gpl-violations.org. The very same license requires that further modifications, including those to the build configuration, are published also.