Rich,
"define osc 8" Is NOT changing oscillator frequency, It's just telling PBP at which frequency the oscillator is running. And most important, all defines must be in UPPERCASE when using PBP. Not 100% sure if required, but I would also try writing PORTB.0 uppercase.
BobK is right too, try adding define TRISB = %00000000. I don't exactly remember why, but I had some problem a while ago using high and low without having defined the port as an output, (but PORTB.0=1 was working fine!)
Picaxe is fantastic to learn PIC, but is missing all details related with PIC registers. When you're programming with PBP you have to read and understand the datasheet of the chip you're using. Then you will be able enjoy PBP and use all the flexibility of you're PIC.
J-P
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