Hmmmmm.... try putting the trig = 0 before the main loop:
Code:
    trig = 0            ' start output in LOW state

main:
GOSUB distance    
    SELECT CASE dist
        CASE 0          ' PULSIN timed out and returns zero, turns LED OFF
            LOW led 
        CASE IS < 8     ' dist <8 inches but not zero, turns ON LED
            HIGH led 
        CASE ELSE       ' dist >8 inches turns LED OFF
            LOW led
    END SELECT
GOTO main    

distance:
    PULSOUT trig,1      ' each count = 10us
    PULSIN sens,1,dist  ' will time out in 655ms if nothing received
    dist= dist/15 'convert to inches
    PAUSE 100
RETURN

END