What's causing my microcontroller LED program to stop working?
I would have thought that you would need a loop around your code - 

while(1)
{

    if (ip == 1){
       op = 0;
       wait (1.0);
       op = 1;}
    else {
       op = 1;}
}


Before you have chance to press the button you code will have finished and exited. You need the while to keep the if statement repeatedly running.