Hey anand.s@quest-global.com,
In answer to your questions:
1. No, you can use the internal loading capacitors by specifying the option in the clock registers. "Good design practice" varies with the part. For a 32.768kHz crystal, I'd keep everything as simple as possible with the specified external load capacitance (or you can turn on the 4pF and 8pF internal loads for 12pF which should be good enough).
2. These are anlog parts (actually all digital components are analog parts) and there are different tolerances for each part which means the circuit on the different boards operates differently according to the actual values of the parts.
3. I would program in 12pF as noted in answer 1.
I would suggest:
1. Probing the crystal pins with an oscilloscope to see if they start working spontaneously. If they do, then you have a capacitor loading problem.
2. Depop the 20pF external capacitors and setting the internal load capacitors to 12pF. This should be the easiest way of testing the circuit.
My guess is, if the traces from the MK66 to the crystal are short without any discontinuities you will be able to run without any problems with enabling the 4pf and 8pF internal load capacitors without any external load capacitors. There, I've saved you about $0.005 on your product.
myke