I found this document with a little * that sort of answers my own question.

http://support.apple.com/kb/TA46886?viewlocale=en_US

"* The 68040 versions of the Macintosh LC 5xx and Performa 5xx series do not recognize the Apple IIe Card when there is a communication card occupying the Communication Slot."

In my case the IIe card works fine but the Communications Slot does not. At least I have my answer.

oz390gta