Very strange...I did what you suggested but it only prolonged the end result. I am seeing two things when the interrupt crashes....either it hoses the main loop and the interrupt oscillates at a high frequency of 235 Khz or it completely stops and main keeps going with its toggle. This is what I added to the ISR.

Code:
asm
; Save W, STATUS and PCLATH registers, if not done previously
myint   
        ; retfie auto-restores w, status, bsr, fsr and pclath
  
  bcf   BSR,0
  bcf   T1CON,TMR1ON ; stop timer 1
  bcf   PIR1,TMR1IF  ; clear over flow flag
  movlw 0xEF         ; load timer for 16,535 * 2 prescaler interrupt on 16 bit timer
  movwf TMR1H        ; load high byte
  movlw 0xEF         
  movwf TMR1L        ; load low byte
  bsf   T1CON,TMR1ON ; re-enable timer 1
  movlw 0x02
  xorwf PORTB,f      ; toggle RB1
  retfie             ; Return from interrupt
        
endasm