Why is it so hard to post the code - as in everything? Not just the code, not just the config, not bits, pieces and snippets for us to piece together and extract information from. You think it's hard at your end, how do you think it is for us?

A pause 1000 led on & off program is giving me 125ms on the scope.
That tells me that the PIC is actually running 8 times faster than the compiler thinks it is. You tell it to pause for 1000ms but in reallity it only pauses for 125ms, 1000/125=8. As have been said before it's not very likely that the PIC is running faster than 32MHz (or in this case 8 times faster = 256MHz) it's much more likely that it IS actually running at 32MHz but you haven't properly told the compiler that so it thinks it's running at 4MHz (32 / 4 = 8).

I don't have that chip here but if you post the code, within code tags, which is giving you the 125ms pause when it should be 1000ms I'll see if I can spot the problem.

/Henrik.