To use this config directive you need to use the MPASM assembler, and comment out any
MPASM config statments in the default PBP device header file.

If you're using the PM assembler, then change it to;

@ DEVICE EXTCLK_OSC, WDT_OFF, MCLR_OFF, LVP_OFF, PROTECT_OFF

If you're still having trouble see this thread http://www.picbasic.co.uk/forum/showthread.php?t=543