Hi,
Read thru your mainloop, line by line, and try to figure out what's happening.

You check if PB is pressed, if it is you turn on the LED - that's fine. But if PB isn't pressed you turn off the LED - that's not what you want, is it?
Do you have the two switches wired the same way? I ask because you check PB for a logic 1 while you check PB1 for a logic 0 - that's all fine if it's the way you have it wired, don't forget pullup/pulldown resistors though.
Finally, the comments are somewhat confusing because at one place you say that LOW LED turns the LED on while in another place you say that LOW LED turns the LED off - I don't know which is correct.....

/Henrik.