Looks "not responding to I2C" is the only software reset source besides the Hardware reset source(POR and XRES), I think worth checking again the I2C addressing configurations in your design. Also, check the sch/layout of your circuit board make sure there is no hardware wiring issues.
Hope you are using CY8C9540A, which is a new version of CY8C9540 (no "A").
Use OSC to probing the funcational pins of the device when togglling the P1_B6 and P1_B7 pins would be helpful to debug the issue.
Scoping the lines helped diagnose the issue. It turned out that the debounce circuit was the culprit. It was imparting too negative of a voltage for too long on those pins. On other pins, it was fine for some reason though. Removing the debounce capacitors and/or adding a series resistor to the input switch (reed style float sensor) fixed the problem.