Setting up Internal Oscillator with PIC16F1829
A few things to look at:


Your code enables the watchdog timer, but you are never issuing any CLRWDT commands. I would recommend disabling the watchdog timer until you get the code working.

The watchdog timer is basically just a counter. When it overflows, the microcontroller gets reset. To use it properly, your code needs to keep resetting the counter so that it never actually overflows.

To do this, your code loop should issue a CLRWDT command regularly. The idea is, if the microcontroller gets stuck somehow (either because of a code problem or a hardware glitch), it will stop clearing the watchdog timer. So the timer will overflow and automatically reset the microcontroller instead of just sitting there forever.

If I remember correctly, the default period of the WDT is 2 seconds, after which the PIC will reset. 
Add a decoupling capacitor (to ground) at the PIC's VDD pin. The value isn't critical; anything around 0.1uF or 1uF should be fine.

Decoupling caps are very important for digital ICs. If you aren't familiar with them, spend some time on Google or here on the Electronics Stack.