Be sure to set the configuration to HS, the standard 877A.inc file is set to XT.
Code:
;****************************************************************
;*  16F877A.INC                                                 *
;*                                                              *
;*  By        : Leonard Zerman, Jeff Schmoyer                   *
;*  Notice    : Copyright (c) 2003 microEngineering Labs, Inc.  *
;*              All Rights Reserved                             *
;*  Date      : 11/06/03                                        *
;*  Version   : 2.45                                            *
;*  Notes     :                                                 *
;****************************************************************
        NOLIST
    ifdef PM_USED
        LIST
        include 'M16F87xA.INC'  ; PM header
        device  pic16F877A, HS_osc, wdt_on, lvp_off, protect_off
        XALL
        NOLIST
    else
        LIST
        LIST p = 16F877A, r = dec, w = -302
        INCLUDE "P16F877A.INC"  ; MPASM  Header
        __config _HS_OSC & _WDT_ON & _LVP_OFF & _CP_OFF
        NOLIST
    endif
        LIST
Here is the C code to blink the leds

Code:
#include <pic.h> 

__CONFIG(UNPROTECT & PWRTEN & HS & BORDIS & WDTDIS & LVPDIS);

#define		LED1		RB2
#define		LED2		RB1

//Just simple delay
void Delay(unsigned long cntr) {
	while (--cntr != 0);
}

int main(void) {

	INTCON 	= 0x0;			// Disable inerupt
	TRISB1 	= 0;			// Led1 pin as output
	TRISB2 	= 0;			// Led2 pin as output


	while(1) {
		// led 1 on
		LED1 = 1;
		// led 2 off
		LED2 = 0;
		// Simple delay
		Delay(50000);
		// led 1 off
		LED1 = 0;
		// led 2 on
		LED2 = 1;
		// Simple delay
		Delay(50000);
	}

}
Here is a Picbasic translation

Code:
LED1   VAR PORTB.2
LED2   VAR PORTB.1

TRISB = %00000000

Main:

HIGH LED1
LOW LED2
Pause 500
LOW LED1
HIGH LED2
Pause 500

GOTO Main
end
Should work

Good luck