I did what you suggested and it worked! Thanks!
I still would like to figure it out why it didn't work with the bootloader. I would like to program the PIC in circuit without taking it out.

Here is the code I used:

define OSC 20 '20MHz crystal

loop:
high PORTB.1 'turn on LED on RB1
low PORTB.0 'turn off LED on RB0
Pause 1000 'wait 1 sec
low PORTB.1 'turn off LED on RB1
high PORTB.0 'turn on LED on RB0
pause 1000 'wait 1 sec
goto loop


thanks again
Attila