When C1Out is 1 you set PortB.0 HIGH and when C1Out is 0 you set PortB.1 HIGH. But there is no code in the loop to set either of the outputs LOW again.
Code:
lop:
  if C1Out = 1 THEN
    PortB.0 = 1   ' One on
    PortB.1 = 0   ' The other off
  ELSE
    PortB.0 = 0   ' On off
    PortB.1 = 1   ' The other on
  ENDIF
GOTO lop