The D0 led should NOT be on when you turn the switch on, so you are correct.
Check out this guide made by HackDaBox,
http://www.hackdabox.com/SpiderGX.htmlAs far as the fragging goes, I'm going to tell you to make sure the chip is sitting correctly in the LPC holes, unscrew it a little bit and shift it a little left or right. You may want to consider HackDaBox's aluminum foil balls as well.