hi,

First error:

LOOP: MOV TCOUNT,#20 
SETB TR0 
JNB ALARM,$ 
; here you need to reset ALARM bit again
; before repeat the loop otherwise
; TCOUNT will be reloaded permanently after first itteration
JMP LOOP

Second ERROR:

MAIN: MOV TMOD, 01H ;Initialise Timer 0 as 16-bit mode timer 

The line above does not initialise timer!
MOV TMOD,#01H does it.

Regards,
Oleg