Have you tried switching this;
Code:
SWITCH:
IF setting=1 THEN 'if setting is 1, write 2 to EEPROM
WRITE 1,%00000010
ENDIF
IF setting=2 THEN 'if setting is 2, write 1 to EEPROM
WRITE 1,%00000001
ENDIF
To this;
Code:
SWITCH:
IF setting=1 THEN 'if setting is 1, write 1 to EEPROM
WRITE 1,%00000001
ENDIF
IF setting=2 THEN 'if setting is 2, write 2 to EEPROM
WRITE 1,%00000010
ENDIF