Hello and welcome to the fora Mark,
Firstly please include the device in question in the subject.
Presuming S08 family here.
If you look at the TPM block diagramme you will see that the pin output and channel interrupt are optional extras based on the state of CHxF. So yes the timer still works with no pin output OR interrupt or any other combination.
This makes the obvious troubleshooting startegy to look at CHxF as Brett has suggested.
Possible stategy:
Slow your timer clock down as slow as possible.
disable the timer interrupt.
write a simple polling routine that resets the flag and toggles an output (Preferably connected to an LED)
If that works then you can worry about getting the interrupt working.