Digital Circuit with Toggle Switch using Logisim
It looks like your latches woke up in the unknown 'X' state, and the complement of X is another X. For your simulation to work you need a way to initialize the latches in a valid logic state, either 0 or 1. Sorry, but I'm not sure how to do this in Logisim other than adding a separate reset input to your circuit. Perhaps you can specify an initial state in the properties for each gate.

Of course, in real life the latch will wake up in either a 0 or a 1 state and the toggle will work as expected. This is a common artifact of digital logic simulations...unknown values propagate pessimisticly...and you soon learn that it's best to have an explicit reset for the storage elements.