To each their own, but I have better luck modifying the *.inc file for the configs.

One thing I do not see is "DEFINE OSC 4" at the top of your code. If it is there then this is a good reason to use the CODE brackets and post your whole code.

Try this
Code:
DEFINE OSC 4

ANSEL=%00000000
CMCON=7

LOOP:

HIGH GPIO.2
PAUSE 100
LOW GPIO.2
PAUSE 100

GOTO LOOP
When you have a problem like this go basic.. no variables, one piece of hardware and so on.

This is my 12F675.inc set up
Code:
 NOLIST
    ifdef PM_USED
        LIST
        include 'M12F675.INC'	; PM header
        device  pic12F675, intrc_osc, wdt_on, pwrt_on, mclr_on, protect_off
        XALL
        NOLIST
    else
        LIST
        LIST p = 12F675, r = dec, w = -302
        INCLUDE "P12F675.INC"	; MPASM  Header
        __config _INTRC_OSC_NOCLKOUT & _WDT_ON & _PWRTE_ON & _MCLRE_OFF & _CP_OFF
        NOLIST
    endif
        LIST
Are you using PM or MPASM?