Hi,
This forum isn't really about discussing issues with compilers/languages other than PBP but a quick glance at your code shows
Code:
T0CON = 0x87;
// configure Timer 0 - select 16-bit mode,
// internal clock source, enable 1:256 prescaler
The value of 0x87 seems to correspond with the comment which probably isn't what you want to do if using an external clock source connected to T0CKI.

/Henrik.