Thank you,
Russell, Erik, Andy and Charles!

Below is my code in, I hope, the correct format.

To answer Andy's question, I have a parallel pair of 0.1uf caps across the entire 5V input between 5V and Ground.
I did not yet connect them across each IC as the PCB board was already designed and populated by someone else, so I tried to solve the problem on the already built board, without having to design a new one, the people here are very worried about cost!

I did however run the PIC cct of the power supply and when my cct stalls the PIC board runs as normal, even though that both have the 0.1uf cap network asross the supply inputs.

Charles, Thank you for taking the time to compile my code, am I correct by saying the error that is spoken off is on line 57
" MOV TMOD,#00010001H "
I will fix this and include the END, but do you feel that the code is in any the problem?
Because as I mentiones everything runs as it is supposed to on the test bench co0nnected to a 12V supply?

Again, thank you all for your time, I really appreciate it!

HUND    EQU     100
COUNT   EQU     -10000
count1  equ     -10000


        ORG     0
        LJMP    MAIN
        ;ORG     0003H
        ;LJMP    EX0ISR
        ;ORG     0013H
       ; LJMP    EX1ISR

MAIN:   mov     8EH,#00010001B  
    
        MOV     IE,#00000000B
        MOV     TMOD,#00010001B
        MOV     IP,#00000001B

        MOV     P0,#00011111B 
        MOV     P1,#0H
        MOV     P2,#01111111B; for test
        MOV     P3,#00001100B 


notch0: MOV     P1,#00000000B
        CALL    DELAYLOOP

        SETB    P1.1
        SETB    P1.0
        CALL    DELAYLOOP


        SETB    P1.3
        SETB    P1.2
        CALL    DELAYLOOP


        SETB    P1.4
        CALL    DELAYLOOP

 
        SETB    P1.5
        CALL    DELAYLOOP


        SETB    P1.6
        CALL    DELAYLOOP


        LJMP    NOTCH0        





;*****************************************


;******************************************************************
DELAYLOOP:      MOV     R7,#HUND
ENTER:          MOV     TH0,#HIGH COUNT
                MOV     TL0,#LOW COUNT
                SETB    TR0
DELAY:          JNB     TF0,DELAY
                CLR     TR0
                CLR     TF0
                DJNZ    R7,ENTER
                RET
;******************************************************************

end