Ok, by deleting the two COPY statements, I was able to compile this (single) program with ILSMARTLINKAGE. However, I am not seeing any error. It occurs to me that the error is not necessarily associated with this first program, and it might be worth systematically removing one program at a time from the project until the problem goes away. This should be a good indication that the last one removed is the one causing the problem.
Alternatively, if this doesn't lead anywhere, could you raise a support incident and attach the whole project?