Problem has been completely solved, as you suggested, by putting 0.1uF ceramic caps spanning the power supply lines to the PIC and the MAX232 on my breadboard. Thanks for the solution.

Incidentally, I found another problem relating to power supplies when experimenting with the 16F877. Like many PICs, the device has 2 pins (on opposite sides of the DIP) for each of the VDD and VSS connections. Thinking it would be good to connect up both sets, I found the PIC drew a heavy current and did'nt work. Only one pair should be used. The datasheet does not detail this.

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