The purpose of that LED is to give a visual indication that the PIC is indeed receiving data from the PC. It should toggle on/off with every byte received.
Initially, when the program button is pressed - the LED should be lit, assuming that the TX line from the PC to the PIC is idle (or not connected at all).
After the PIC receives its first byte - the LED should change states. Upon receiving the second, once again changing states. It should continue to do so until the PC has finished programming it. The LED is of little importance and the message that you program should begin to scroll automatically after successful download.
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