Input?

[Melanie]

You're 99% of the way there... here's an amendment that should get you all the way...

Led Var PORTC.1
Sensor var PORTC.2

TRISC=%00000100

high Led
pause 5000
low led
loop:
if sensor = 1 then
high led
else
low led
endif
goto loop
end

[Bruce]

On the PIC16F688 RC1 & RC2 (and others - see datasheet) are A/D inputs by
default on power-up. Add this to the first section of your code;

ANSEL = 0

That will allow use of these pins as digital.