The HC08's have a monitor ROM built in that contains the routines to allow a programming and debugging tool to have access to the part. When the part is reset, the states of some of the pins are checked to see if the monitor ROM should be executed instead of the user's code in flash. You can see the details of this in the data sheet in the Monitor ROM chapter.
The montor ROM will always be selected if IRQ is tied to a high voltage called VTST. On the Axiom board this is MODE switch 3.
As the Axiom documentation says, MON08 mode is disabled and the program in flash memory (your program) is run in NORMAL MODE which is all MODE switches in the off position.
"When you tried to run your application without the debugger, did you set the board so that it was NOT in MON08 mode."
do you mean i have to vhange the mode switches back to all off state without pressing reset button.
" You could just be stuck in monitor mode after reset wait for monitor commands"
please explain as i new to freescale microcontrollers