Sigh... I had PortC.0 shorted to PortC.3 on the LAB-X1 U7 pin 2-3 after putting in R11. So all I had to do was change SWDN to another port... Namely PORTD.3.

Anyway, the code above is working very well, for any of those interested in using HSERIN to start and stop your PIC via RS-232.

So, I fixed my own problem. By the way, if anyone is thinking of buying a developers bundle I highly recommend getting Codestudio PLUS... the added support for the ICD is extrememly helpful when debugging these PICs.
The LAB-X1 board is very nice, after the initial intimidation wears off and you understand it... like most things.
Cheers!