How long is "pausetime"

You are toggling the pin between high and low and your meter will probably not see the voltage stable for long enough to get a true reading.

Currently the pin is operating on a 50% duty cycle and 2.5 volts just happens to be 50% or 5V !!!!

Comment out the "low port b.7" statement which means once the LED comes on it will stay on but you will then have a stable condition on the pin to be able to measure.

My guess is that it will then read 5V