"Soldered the components as per the application notes"

Which application notes ???

Will need the circuit of your hardware setup or atleast a description of what you have done so far to proceed further.

And dont contemplate about many I/Os as you have described, AS OF NOW. Crawl-standup-walk-run is the sequence.

Use the Port1.0 to read a switch and connect a LED to port Port1.1 ( +5V -> 330 Ohms resistor -> Anode of LED -> Cathode to Port1.1 ) I do hope that your MCU can handle 10mA per pin in sinking mode - check data sheet to be sure and if it is less, increase the 330 Ohms value..

Having got this setup, write a simple code to

1. Light the LED as long as the switch is closed
2. Light the LED for 5 secs everytime the switch is closed

Get past this stage first. LCDs, matrix keyboards can all wait.

Raghu