[roddyp]

It seems that 1.8.0 introduced some unexpected problems than just the problem with the "Time" library.

I think it's because of the way Arduino code gets 'massaged' into acceptable C/C++ by the IDE, creating any missing function prototypes. I guess  this has changed to not generate prototypes when functions are excluded by the preprocessor. Either that or a bug in the way these prototypes are now generated.
The following code won't compile in 1.8.0 - I'll see if it does in 1.6.x

Code:

#ifdef WIBBLE
void foo()
{
}
#endif

void setup() {
  foo();
}

void loop() {
}

Updated : This won't compile in 1.6 either. Maybe you're not seeing problems because your build has a different config file?

Oh - and I see 1.8.1 is here now