WEIRD... look to be defect LCD.

what about if you use these line after PAUSE 2000 at the begining

;reinitialize Lcd before write on
lcdout $fe,$28 ;lcd mode 4 bits,5x7, 2 lines
lcdout $fe,$0c ;lcd on
lcdout $fe,1 ;clear lcd


but you put 9 volt to Vo pin... not sure is a good idea...


can you add 10uF tantalum (47uF electrolytic) and a 0,1uF an the supply line close to the LCD ???