I did a search of the Rim KB and the only thing I could find was for the 8707 (Japanese BB) which said
When using 7-bit data coding, make sure the content of the SMS text message is less than 160 characters. When using UCS2 (double byte) data coding, make sure the content of the SMS text message is less than 70 characters.
Did you pull the battery after setting it to 7-bit?
If none of that works, you might want to take a look at Teleflip
. No need to register, just use it. Then you don't have to deal with SMS at all!