moud_man,
Although your program is doing things it doesn't need to be doing. There's nothing in there that would cause the described problem. The instructions there will execute in only a few microseconds, and there won't be a problem of not having enough time to make it through the loop.
So let's look at the hardware instead.
Are you using transistors to drive the commons of the LED's? The PIC output's can only source 25ma. It takes more than that to drive a seven segment LED.
Are you using one of those Proto-Boards with a thousand holes that you just plug stuff into? If yes, where are the crystal and capacitors located? Are they very close to the chip? Long wires to the crystal will cause unstable frequencies. Especially if they are right next to high current outputs such as you are using on PORTA.0. The more segments that are lit, the more interferance you would see.
What kind of power supply are you using. Is it capable of providing at least 150ma while still maintaining +5V?
Now, back to the program. The Elapsed Timer keeps track of the seconds, minutes, hours, and days. There's no need for the Update: routine to try to count it again. Just use the variables that are already there. Hint: DIG.
That is incorrect. I currently have the Elapsed Timer running in 3 different commercial products with many other things going on at the same time.***BUT THAT IS THE CASE IF THE ELAPSED TIMER CODE IS ALONE IN THE PROJECT****
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