Unfortunately we don't have Softec Demo board, but we I tried your project with Adapt9S12E128 demo board from Technological Arts. No problem with registers as you described was found again, the LED turned on when the switch pressed. Please check Softec demo board setting to find probable reason of your problem.
Note:Your user code shouldn't be written to 'Processor Expert end of main rountine' section, but above it not to be remove it after generation, see example.
void main(void)
{
/*** Processor Expert internal initialization. DON'T REMOVE THIS CODE!!! ***/
PE_low_level_init();
/*** End of Processor Expert internal initialization. ***/
/* Write your code here */
for(;
{
LED0_PutVal(!SW1_GetVal());
}
/*** Processor Expert end of main routine. DON'T MODIFY THIS CODE!!! ***/
for(;
{}
/*** Processor Expert end of main routine. DON'T WRITE CODE BELOW!!! ***/
} /*** End of main routine. DO NOT MODIFY THIS TEXT!!! ***/