The default oscillator config for the 887 is XT. But it's easy to switch to the internal oscillator without using configs.
Just add OSCCON = %01100001 for 4mhz, or OSCCON = %01110001for 8mhz.
And clear PORTD before setting TRIS.

Code:
define osc 4
OSCCON = %01100001
PORTD = 0
TRISD = 0
loop: PORTD.0 = 1 ' Turn on LED connected to PORTD.0
Pause 500 ' Delay for .5 seconds

PORTD.0 = 0 ' Turn off LED connected to PORTD.0
Pause 500 ' Delay for .5 seconds

Goto loop ' Go back to loop and blink LED forever
End
Tested on my PicKit2 with 887 on the Debug Express board.