I just tested this on a 4550 (I do not have a 2550) and it works as expected.
Code:
DEFINE OSC 8
@ __CONFIG    _CONFIG1L, _PLLDIV_5_1L & _CPUDIV_OSC1_PLL2_1L & _USBDIV_2_1L
@ __CONFIG    _CONFIG1H, _FOSC_INTOSCIO_EC_1H
@ __CONFIG    _CONFIG2H, _WDT_ON_2H & _WDTPS_512_2H
@ __CONFIG    _CONFIG3H, _PBADEN_OFF_3H & _MCLRE_OFF_3H
@ __CONFIG    _CONFIG4L, _LVP_OFF_4L & _XINST_OFF_4L & 0DFh
OSCCON = %01110000

    TRISD = %00000000
    TRISC = %00000000
    flip:
    HIGH PORTD.7
    PORTD.6 = 1             'Turn on LED
    PORTC.0 = 1
    PAUSE 500               'Delay for .5 seconds
    PORTD.6 = 0             'Turn off LED
    PORTC.0 = 0
    PAUSE 500
    GOTO flip