You have Timer1 configured to operate from the T1G gate input pin.

This works fine on the 690;
Code:
ASM
INT_LIST  macro    ; IntSource,        Label,  Type, ResetFlag?
         INT_Handler   TMR1_INT,     _CHECK,   PBP,  yes
    endm
    INT_CREATE               ; Creates the interrupt processor
ENDASM
   T1CON = %00110001
 
@ INT_ENABLE  TMR1_INT
 
  while 1
      FOR W1=1 TO 10
      TOGGLE PORTB.5
      PAUSE 100
    NEXT W1
 
    FOR W1=1 TO 5
      TOGGLE PORTB.5
      PAUSE 1000
    NEXT W1
  wend
 
CHECK:
    TOGGLE PORTB.6
@ INT_RETURN