1. P1.2

2. Usually, LED is connected by next scheme:
port pin -- led -- resistor 330 oms --- +5V
so to make LED on you should do clr P1.2

if you connect LED between port pin and ground and try to switch LED on by setb p1.2 probably you will have no effect - CMOS logic of microcontroller cannot emit logical ONE with enough current. In best conditions pin may emit "1" with about 0.1mA --- otherwise it goes to protect mode against short circuit.

3. Remember maximum current limit conditions for input current:
- per pin: 10mA
- per 8-bit port: P0 = 26mA, P1/2/3 = 15mA
- per all output pins: 71mA